Why Is Bank of America Trailing the Market Today?

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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.

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9/23/2016 4:00 PM
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