The Financial Times reports that shares in Lehman Brothers fell some 6% Wednesday after several analysts downgraded their earnings forecasts. Fears are growing that Lehman is now likely to post a second-quarter loss after being poorly positioned on hedging certain fixed income instruments.

Credit Suisse analyst Susan Roth Katke says that she expects the firm to post a loss in the second period, which would be driven by $900m of losses in Lehman's fixed income businesses. The firm is currently in the midst of another round of layoffs, with 1,300 jobs thought being axed globally.

Lehman isn't, however, alone as some of the hedges other Wall Street firms put in place to limit the downside on real-estate securities and leveraged loans have become 'unglued'. The newspaper says that some analysts are putting Lehman's second-quarter writedowns as high as up to $2bn, and Morgan Stanley is also thought likely to have to writedown up to $1bn in the second period. Goldman Sachs and Merrill Lynch are also thought likely to be affected by this situation, although not by anywhere near the same amount.

In the meantime, Oppenheimer analysts have been spreading their usual doom and gloom. US financial stocks traded lower Tuesday, after the firm issued a note which said that: 'Our view is that the credit crisis will extend well into 2009 and perhaps beyond, and although the complexion will change, the net effect will be the same - three years of multibillion-dollar revenue reversals'. Meredith Whitney from Oppenheimer said that 'we believe the real harrowing days of the credit crunch are still in front of us, and will prove more widespread in effect than anything yet seen'.

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