Remember last week? It seems so long ago already. Stocks entered bear-market territory and it appeared the end was near for some in the financial sector.

This week, just the tiniest bit of good news sent financials on a tear. Who knew that a positive earnings report from Wells Fargo could have such an impact on the broader market? News on Wednesday that its quarterly profit declined by 22 percent helped drive its shares up 32 percent and the Dow up 277 points.

In times like these, it seems, the news is all relative. Raise your dividend and you just might create billions in new wealth.

Fannie Mae and Freddie Mac appeared on the brink of disaster on Monday when federal regulators proposed a bailout for the debt-laden mortgage giants. Hedge-fund manager Bill Ackman shorted the shares and went on CNBC to offer a solution that would save the companies but send their stocks to zero. Shares plunged as the clock ticked on their countdown to obsolescence.

But, oh what a bad week Ackman must have had as the days wore on. By the end of the week, Freddie Mac announced plans to raise $5.5 billion by selling new stock, essentially giving the proverbial middle finger to the Treasury Department and to Ackman.  

Shares of Freddie, which traded for as low as $4.75 on Tuesday, had rebounded to $9.18 by Friday's close. Sister Fannie did just fine for herself too. Shares popped from $6.68 to $13.40.

Absurdity prevailed among the big Wall Street banks as well. J.P. Morgan kept the Wells Fargo rally alive when it reported a 53 percent decline in quarterly profit on Thursday morning (But hey, at least we beat analyst expectations!).

On a conference call, chief executive Jamie Dimon said he expects the credit market to potentially weaken further and that J.P. Morgan's portfolio of prime loans "looks terrible." J.P. Morgan's shares climbed 14 percent.

Merrill Lynch reported later on Thursday afternoon after its shares had enjoyed a nice ride up more than 9 percent on the back of J.P. Morgan's earnings report. Its numbers were positively atrocious, and they sent investors fleeing from the stock in after-hours trading.

But those sellers ended up looking like suckers by morning. That's when everyone forgot about the Merrill report from the night before and focused instead on the not-bad news from Citigroup: a $2.5 billion loss and $7 billion in write-downs.

Terrific! You beat Wall Street's incredibly low expectations!

Citi shares soared nearly 8 percent on the news. Merrill, meanwhile, retained all of its gains from Thursday and ended Friday up 0.59 percent.

Investors clearly give more credence to firms for beating expectations than they punish them for missing their numbers.

Last week we advised Wall Street to take a Xanax. This week it might consider a nice herbal remedy for memory loss.