BankThink

Why are BofA and Citi stocks still climbing?

Bank stocks´ movement ahead of Thursday´s planned release of the Treasury Department´s stress tests results is giving new meaning to the familiar adage, "buy on the rumor; sell on the news." The financial press this week plunged full force into its speculation on which banks "passed" the government´s test and which did not. Despite the variety of guesses they´ve made, news outlets have been able to agree on a few likely tidbits, such as Citigroup´s apparent need for billions of dollars in additional capital. But Citi´s stock is up for the second day in a row. Why?

Yesterday, the banking sector rose with uniform steepness as investors supposedly concluded that the amount of capital banks would need was smaller than expected. Today, some bank stocks are falling-a normal post-binge phenomenon. What is surprising is the fact that Bank of America and Citi are both continuing to climb. We at BankThink don´t pretend to be investment experts, but we can´t help wondering what series of events led to the separation of BofA and Citi from the rest of the pack.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER