The first full week of May is looking great for financial stocks, and a huge rally led by the news that Bank of America (NYSE:BAC) had finally settled its legal problems with mortgage insurer MBIA (NYSE:MBI) gave the entire sector a lift -- particularly B of A, which finished the day yesterday with a share price jump of 3.5%.
Today is looking sweet once again, as both the Dow and S&P 500 closed the day ahead. Citigroup (NYSE:C) ended the day with a 1.33% bump, on top of its stellar gains yesterday. Though B of A's good news, on top of a super-charged jobs report, would be enough to lift Citigroup stock on any day, Citi has some good stuff going on as well -- enough, I think, to keep its upward stock price hike going for quite a while.
Excellent news on the legal front isn't just the province of Bank of America. Citi just was the recipient of two separate decisions that will allow the bank to take a couple of huge legal battles off its litigation plate. Both of these decrees, passed down by federal judges, concern millions of dollars in auction rate securities underwritten by the bank, which have lost value since February. Unhappy investors will now be unable to pursue their claims against Citi through arbitration, a big win for the bank.
In addition, Citi looks like it may be soon unloading its Brazilian credit card and consumer financing units to Itau Unibanco Holding SA. The two financial giants are negotiating at the minute, after rivals Banco Bradesco SA and Banco Santander Brasil SA appear to have dropped out of the running. Selling off these sections should help Citi concentrate on its Latin American wealth division, which it is currently trying to bolster.
Even as Citi and its peers look to be on top of the world today, keep in mind that it is the overall performance of a stock that really counts. 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.