Shares of Wells Fargo & Co. /zigman2/quotes/203790192/composite WFC +1.17% surged 4.7% in afternoon trading Wednesday, enough to pace its financial sector peers, and to put them on track to close at an 11-month high. The rally comes as the San Francisco-based bank, which got itself in hot water with regulators over a fake-account scandal years ago, is looking to cut its annual budget by at least $8 billion without angering those regulators, as The Wall Street Journal reported . Meanwhile, Bloomberg reported , citing people with knowledge of the matter, that Federal Reserve officials have privately signaled that they accept the bank's proposal for overhauling its risk management and governance, which puts the bank on course for the Fed to lift the cap placed on the bank's assets. A Fed spokesperson declined a MarketWatch request for comment. The stock's rally also comes after Warren Buffett's Berkshire Hathaway Inc. /zigman2/quotes/200060694/composite BRK.B +0.95% disclosed late Tuesday that it sold 74.96 million Wells Fargo shares, or 58.8% of its stake, during the fourth quarter. The stock, which is headed for the highest close since March 6, has rallied 45.5% over the past three months, while the SPDR Financial Select Sector ETF /zigman2/quotes/209660484/composite XLF +0.86% has gained 16.3% and the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.77% has advanced 8.6%.