Citigroup: Financial Winner

NEW YORK ( TheStreet) -- Citigroup ( C) gained the most among the largest U.S. financial names on Tuesday, posting a 1.67% gain that lifted shares to $33.48.

Bank stocks -- while in the spotlight because of a JPMorgan Chase ( JPM) investor day and improving prospects of a $8.5 billion mortgage settlement for Bank of America ( BAC) -- took second billing to the Dow Jones Industrial Average, which above 13,000 for the first time since May 2008.

The KBW Bank Index ( I:BKX) was up less than 1% to close at $45.56, beating broad market gains at the Dow, S&P 500 and Nasdaq.

Citigroup's shares are now up over 27% year-to-date on following a 44% drop in 2011. The bank was boosted by news from the Federal Deposit Insurance Corporation that bank earnings rose to $119.5 billion for 2011, a 40% from the previous year and the most since 2006. Banks like Citigroup with assets of $10 billion or more accounted for 83% of total bank earnings, said the FDIC.

Meanwhile, Bank of America gained 1% to $8.12, adding to a near 50% year-to-date share rally, after a 58% 2011 fall. The bank was boosted by signs that it may close a $8.5 billion settlement on residential mortgage related securities issued by its Countrywide Financial division, which it acquired in 2008. An investor lawsuit contesting the settlement has been New York state courts, potentially paving the way for it and other banks mortgage-related lawsuits, with other large players like Citigroup and JPMorgan benefitting.

In late day news, Wells Fargo revealed that it has received a Wells Notice from the Securities and Exchange Commission, which indicates that the biggest home lender in the U.S. may face civil claims on its sale of mortgage-backed securities. The disclosure was made in Wells Fargo's annual report.

JPMorgan rose 0.4% to $39.21 as it hosted an investor day conference just a day after CLSA analyst Mike Mayo said the bank should split itself to realize the full value of its businesses. The nation's largest bank also received weekend press, when Warren Buffett said that investors should focus JPMorgan's share buyback plans.

In the investor day, the head of JPMorgan's investment bank Jes Staley disclosed that the bank's trading division made $375 million in quarterly revenue from credit trading in 2011, the strongest trading category of the bank, followed by interest rate swaps, where it brought in $350 million in revenue per quarter.

Shares of Morgan Stanley ( MS) fell 0.2% to $18.71, after it disclosed in its 10-K filing that a three notch ratings downgrade from Moody's Investor Service would cost over $5 billion in swap termination and collateral payments to trading counterpartys and exchanges. The investment bank is currently facing a "ratings review" for the downgrade by Moody's, which could prove to be costly.

After opening lower, financials and the Dow Jones Industrial Average rallied on a stronger than expected reading of consumer confidence from the Conference Board. February numbers showed a reading of 70.8, up from 61.5 in January, beating economist estimates.

That reading overshadowed a weaker than expected reading on home prices. The S&P/Case Shiller home price index reported that its 20-city home-price index saw a year-over-year 4% drop in December. Economists were looking for a 3.6% decline. A protracted drop in home prices would cut at bank earnings, according to many analysts

Late on Monday, ratings firm Standard & Poor's cut Greece's credit rating to "selective default." The move comes after reductions by Fitch Ratings last week and ahead of a Greek bond swap in which some private creditors may resist taking part in the exchange. Greece is now the first eurozone nation to be rated in default.

Interested in more Wells Fargo? See TheStreet Ratings' report card for this stock.

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-- Written by Antoine Gara in New York

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