The assorted downgrades in the financial-services sector have investors selling shares and holders of debt taking out additional insurance to guard against the risk of default in trading today.

All four of the major brokerages show a higher cost to insure $10 million in bonds against default, according to analysts at Phoenix Partners Group, which tracks the spreads on credit-default swaps. The same can be said for Citigroup Inc., which has lost 6% in trading and was the most actively traded on the Big Board in the wake of a downgrade from brokerage Goldman Sachs.

Goldman Sachs Group Inc.’s credit-default swaps are also wider, moving out to 130 basis points, or $130,000 to insure $10 million in bonds against default for five years. Wachovia Securities downgraded the stock to “market perform,” expressing concerns about slowing growth in the banking and prime brokerage areas. “GS is the leader in the space…but is not immune to weaker markets and likely lackluster summer conditions.”

Analysts at Sanford Bernstein were also critical of brokers today, particularly Merrill Lynch & Co., as it lowered estimates on the firm to a loss of $1.07 a share for the quarter, down from a 56-cent profit earlier. “Unlike in past cycles, this time around MER has found itself with the largest balance sheet exposure to CDO assets among the large capitalization brokerage firms,” they write, estimating write-downs of $3.5 billion for Merrill.