Stocks Ignore Citi's Woes

Still, shareholders took the announcement in stride and hoped the worst might be over for the financials, with Citigroup finishing up $1.05, or 2.3%, to $47.72.

At Switzerland's UBS, the company is preparing to post its first quarterly loss in nine years due to its subprime exposure. UBS expects to book a charge of roughly $3.4 billion.

Even so, the stock closed higher by $1.69, or 3.2%, to $54.94.

Gains in Citigroup and UBS helped lead the financial sector higher. The Nasdaq Financial 100 Index rose 2.4%, the KBW Bank Index ended up 1.9%, and the NYSE Financial Sector Index added 1.8%.

"This market does have the ability to shrug off bad news because it wants to go higher," said Paul Mendelsohn, chief investment strategist with Windham Financial. "The general trend is up and there's very little concern. Even the financials are up despite negative news. This market is climbing the proverbial wall of worry."

Homebuilders were also among the day's winners after Citigroup upgraded Centex (CTX Quote), Lennar (LEN Quote), Pulte Homes (PHM Quote), D.R. Horton (DHI Quote) and Ryland Group (RYL Quote) to buy from hold, as the firm thinks a near-term bounce is due.

Each of the homebuilders rose between 2.7% and 8.7%, boosting the Philadelphia Housing Sector Index by 2.9%.

On the tech side, Nokia (NOK Quote) reversed early weakness and finished slightly higher after saying it would pay more than $8 billion for Navteq (NVT Quote), a maker of digital maps for navigation systems and devices. The deal values Navteq at $78 a share. Shares of Nokia tacked on 3 cents to $37.96.