Why Is Bank of America Trailing the Market Today?

At its low point today, Bank of America's (NYSE: BAC  ) stock was down more than 1% even as the S&P 500  (SNPINDEX: ^GSPC  ) fell far less, and the Dow  (DJINDICES: ^DJI  ) rallied. Should B of A investors be concerned?

The comparative weakness of Bank of America today can be seen across the big financials as megabank competitors JPMorgan Chase and Citigroup  (NYSE: C  ) are also watching their stocks fall. That could have something to do with the World Economic Forum going on in Davos, which is drawing the spotlight back to big banks -- and more specifically, the challenges and threats to the future of big global banks.

At the same time, with the announcement that Wells Fargo  (NYSE: WFC  ) raised its dividend 14%, investors in B of A and Citi in particular may be wincing as they're reminded of the trouble those banks have had getting back to a state of health that would allow them to pay meaningful dividends. With submissions in for the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR, pronounced "see-car"), those investors will likely have to wait until March to hear whether B of A or Citi gets a capital-return green light.

Looking at the other side of the picture, the primary reason the Dow is as strong as it is today is because of a single company: IBM. The mainframe-turned-tech services and software company announced impressive fourth-quarter results and its stock is booming in the wake. Because the Dow is just a 30-company index, a big push like that from a single stock can make a big difference.

Of course it won't surprise Foolish readers to hear me say that one day's stock move is almost always of near-zero importance. While those blips and twitches can be distracting, it's important that Bank of America investors step back and focus most of their attention on the big picture.

A closer look at that big picture
To learn more about the most talked-about bank out there, check out our in-depth company report on Bank of America. The report details Bank of America's prospects, including three reasons to buy and three reasons to sell. Just click here to get access.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2210675, ~/Articles/ArticleHandler.aspx, 4/16/2014 6:47:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement