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Investors Reward Citigroup Today

By Amanda Alix - Apr 23, 2013 at 12:42PM

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Financials continue their upward trajectory -- for now.

The financial sector is lit up bright green this Tuesday mid-day, continuing its climb from the second half of the day yesterday. The early part of the day wasn't kind to big banks, which made me wonder why investors were punishing Citigroup (C 0.57%), especially after its positive earnings report early last week.

With big banks like Citi, Bank of America (BAC 1.60%), Wells Fargo (WFC 2.47%), and JPMorgan Chase (JPM 1.02%) having reported earnings, perhaps the market has had enough time to digest all this new information. Bank of America's report, in particular, seemed to have a roiling effect on the financial sector, despite the fact that it wasn't half bad at all.

But what a difference a day makes. Citi is moving up nicely, as is the whole sector. Bank of America is leading the way, as its share price moves up to and over the $12 mark, a rise of more than 3%. Citigroup is nearly matching that pace, so far racking up a 2.9% rise about half an hour before lunch time.

Will this forward momentum last? The market can be fickle, certainly. But, when it comes to Citigroup, investors are doubtless rewarding the big bank for the progress it has made over the past year, aptly reflected in its first-quarter earnings report.

One thing that became abundantly clear was the fact that Citi is fast becoming a mover and shaker in the mergers and acquisitions and investment banking business, something that shows no signs of abating. With the shrinking of troublesome Citi Holdings, as well as other cost-cutting measures, the bank's expenses are being brought under control. With new CEO Michael Corbat at the helm, things are definitely looking up.

Like Bank of America, Citi seems to be more willing to show its softer side these days, too. Ahead of its shareholders' meeting, the bank has invited Mike Mayo, the often-outspoken CSLA analyst, to have a private chat with Corbat. Mayo had to demur, but the offer indicates that Citi wants this year's annual meeting to be friendlier than the last, when shareholders voted down then-CEO Vikram Pandit's pay package. Unruffling Mayo's feathers ahead of time -- he is expected to have a list of tough questions for the bank's management -- was obviously tops on Citi's agenda.

With all the positive changes at Citi since last year's meeting, however, things should go much more smoothly.

Citi is flying high today, but tomorrow could paint an entirely different picture. As Foolish, long-term investors, we recognize the fact that one-day changes in share price don't make or break an investment. Even stocks have good days and bad days, so it's important to realize that sometimes they're not portents of dire news, but merely squiggles that we can safely ignore. 

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Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
$52.98 (0.57%) $0.30
Bank of America Corporation Stock Quote
Bank of America Corporation
$36.22 (1.60%) $0.57
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
$127.64 (1.02%) $1.28
Wells Fargo & Company Stock Quote
Wells Fargo & Company
$44.36 (2.47%) $1.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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