The business stories that matter, by Fortune's Colin Barr
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April 18, 2008, 1:00 pm

Citi rally leaves Thornburg behind

Citi’s (C) rising tide is lifting the financial sector. Bank and brokerage stocks soared after Citi posted a first quarter that wasn’t as bad as some analysts had feared. Citi was up 8%, while rivals Bank of America (BAC) and JPMorgan Chase (JPM) rose 5% and 3%, respectively. Among brokerages, Goldman Sachs (GS) was up 5% and Merrill Lynch (MER) was up 3%.

And the rally wasn’t limited to the quality names. A number of firms that have seen their shares tumble this year due to worries about the health of their big mortgage portfolios also jumped: Countrywide (CFC) surged 9%, Indymac (IMB) rose 5% and online broker E*Trade (ETFC) soared 11%. Even Bear Stearns (BSC), due to be taken out of its misery later this year by JPMorgan Chase, rose 3%, roughly in line with the value of the all-stock buyout deal.

The one firm that failed to participate in the rally was Thornburg Mortgage (TMA), the Santa Fe, N.M., jumbo-mortgage lender that late last month sold a 90% stake to investors to stave off a bankruptcy filing. Shares were down 2 cents in midday trading at $1.29 apiece. Looking at the bright side, though, the warrants that the Thornburg investors got giving them the option to buy shares at a penny each are still firmly in the money.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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