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Updated from 2:08 p.m. EDT

The financial sector catapulted even higher than the rest of the market Monday on confirmation of

Sallie Mae's

(SLM) - Get Free Report

buyout and a load of solid earnings reports, most notably from financial-services behemoth

Citigroup

(C) - Get Free Report

.

Citi

posted

first-quarter earnings (excluding a special charge) of $5.88 billion, or $1.18 a share -- up 7 cents from last year, and 9 cents higher than analyst estimates from Thomson Financial. Shares were recently higher by $1.33, or 2.6%, to $52.93.

Wachovia

(WB) - Get Free Report

likewise

squashed first-quarter estimates

, pocketing $1.24 a share on a non-GAAP basis vs. the Street's $1.16 per-share targets. Shares tacked on 2% to $55.06.

The

NYSE

Financial Sector and the KBW Bank indices, each of which harbors both Citigroup and Wachovia, respectively shot up 1.7% to 9738.74 and 1.9% to 96.46.

As for Sallie Mae's stratospheric rise, the nation's biggest student lender

agreed to sell itself

for some $25 billion to a group lead by J.C. Flowers. The deal pans out at $60 a share and should close late this year. Shares soared $8.59, or 18.4%, to $55.35.

Feeling the residual effects of the deal were

Nelnet

(NNI) - Get Free Report

, another big student lender, as well as

CIT

(CIT) - Get Free Report

, which owns an education-lending unit. Nelnet bounced 14.5% to $28; CIT shares gained 5% to $55.62.

But in a rare downside move today, Sallie Mae rival

First Marblehead

undefined

plummeted

on the buyout news, given that two of its biggest customers --

JPMorgan

(JPM) - Get Free Report

and

Bank of America

(BAC) - Get Free Report

-- are among those taking Sallie Mae stakes. FMD shares recently lost $9.83, or 21.1%, to $34.60. JPMorgan was up 1.8% to $49.97, and BofA added 1.6% to $51.23.

Fremont General

( FMT), on the other hand, led the sector's percentage gainers today. The firm surged 26% to $8.88 after

agreeing to sell

around $2.9 billion of its subprime loans to an unnamed entity, as well as entering talks to sell "most of its residential real estate business and assets."

The

Nasdaq Stock Market

undefined

lifted slightly at $31.46 after

announcing

first-quarter income will probably meet the Street's 24-cent per-share projections, stripping out dime-a-share expenses related to its spurned bid for the

London Stock Exchange

.

Elsewhere,

Fannie Mae

( FNM) jumped 5.5% to $56.92 after Banc of America upped the mortgage lender to buy from neutral, and an analyst with JPMorgan said the ongoing subprime-lending travails won't impact

Moody's

(MCO) - Get Free Report

as much as the Street anticipates. The credit-rating agency was upped to outperform; shares recently gained 4.7%, or $2.92, at $65.72.