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.