Corporate wheeling and dealing is boosting stocks and exchange traded funds (ETFs) today, particularly in the financial sector.

Washington Mutual Inc. (WM) could get a $5 billion investment from private equity firms, reports Tim Paradis for the Associated Press. The company has lost big in the subprime mortgage mess, and it’s talking with a buyout shop and other investors about selling a stake in itself in exchange for cash.

Washington Mutual isn’t a major holding in the financial ETFs we track, but the deal talks are being seen as a positive sign that investors are optimistic about recovery.

A strategist cautions that volatility isn’t exactly over – it’s earnings season, and investor anxiety could mount if the banks reveal bigger losses than expected.

• Regional Bank HOLDRs (RKH), up 2% midday
• Financial Select Sector SPDR (XLF), up 1.7% midday
• iShares Dow Jones US Financial Services (IYG), up 2.3% midday

Tags: Financial, Sector ETFs