How Bank of America Sank the Dow Today

Two-day declines haven't been all that common for the stock market lately. But after a huge run-up to start 2013, the market finally gave in to pressure for at least a mini-correction. News reports blamed concerns about economic activity, the sequestration debate in Washington, and the Federal Reserve for the decline, but long-term investors shouldn't take a drop in the Dow Jones Industrials (DJINDICES: ^DJI  ) of just over 1% over the past two days as cause to believe that a more serious decline is imminent. Although the Dow dropped 47 points today, losses in broader markets were more substantial for the second day in a row, as the Nasdaq Composite (NASDAQINDEX: ^IXIC  ) once again fell more than 1%.

Stocks that have benefited from Fed stimulus and hopes for a recovering economy were among the biggest losers today. Bank of America (NYSE: BAC  ) fell more than 3%, adding to big losses yesterday as particular fears about the housing recovery have weighed on the banking and homebuilder sector. Moreover, ongoing legal problems will continue to plague the company well into the future, representing arguably the biggest threat that the bank faces right now.

Outside the Dow, VeriFone (NYSE: PAY  ) plunged more than 40%, as the electronic payment-systems company gave horrible guidance for both the first and second quarters. Many investors have counted on the potential of electronic payments to revolutionize the financial industry, but with intense competition, VeriFone can't afford to fall behind. Without quick and decisive action, VeriFone may miss out on the full potential that the revolutionary new industry has to offer.

Finally, Heckmann (NYSE: NES  ) fell 3%, after having been down more than 10% earlier in the day. Analyst firm Jefferies downgraded the stock, cutting its 2013 earnings outlook by nearly half, as low natural gas prices continue to weigh on activity in shale oil and gas plays. With Heckmann relying on providing water and liquids for use in hydraulic fracturing operations, a slowdown in activity spells trouble for the company, and Jefferies isn't the first analyst to have concerns about Heckmann's future.

Has Bank of America topped out?
Are recent drops in B of A's stock just the beginning? Find out more about whether Bank of America is still a buy from top financial analysts Anand Chokkavelu and Matt Koppenheffer in their premium research report from the Motley Fool. The report includes reasons to buy and reasons to sell, as well as FREE updates and expert guidance as key news breaks. Click here now to claim your copy.


Read/Post Comments (5) | Recommend This Article (5)

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.

  • Report this Comment On February 21, 2013, at 10:45 PM, tmeareidiots wrote:

    Everyday, it is another hate on Bank of America from the Fools at Motely Fool. Seriously, you bring NOTHING to the table other than pure blather. You blame BoA for the decline of the Dow, but then you mention Verifone 40% decline. Everyday you prove without a doubt that the fools at Motely Fools are just that...Inept, incompetent, nobody’s.

  • Report this Comment On February 21, 2013, at 11:06 PM, SkepikI wrote:

    ^ have you tried walking into your local BAC branch of late? Miserable and deserted in my part of the world. Customer unfriendly, fees lining up to drag you down should you be idiot enough to bring your business to BOA. A bad business run by indifferent or actually bad managers. Smart investors head for exits when the stench of necrosis hits their noses.....

  • Report this Comment On February 21, 2013, at 11:42 PM, tmeareidiots wrote:

    Too funny pal, in my area there are several new branches being built, fresh coffee, lots of baked goods and in an open and inviting lobby, . The customer service is excellent. You must live in the slums, your probably thinking of the police dept.

  • Report this Comment On February 22, 2013, at 9:04 AM, nofoolingforme wrote:

    B of A has definitely turned the corner. There will be some more pain, it is true, but, in three to five years, it will be like the financial crises never happened. Warren Buffet believes, and so do I, that it is a great investment for the future.

  • Report this Comment On February 22, 2013, at 8:12 PM, BentMike wrote:

    Interesting, weird comment to the effect that Fools are uniform on anything.

    Really, DC didn't make much of case for BAC downing the DOW, hardly even addressed that. I think it is just the normal big letter headline to get attention.

    The comments he made about BAC were pretty bland, and not wrong. The lawsuits ARE a bit of a drag anchor. I am shrugging.

Add your comment.

DocumentId: 2270642, ~/Articles/ArticleHandler.aspx, 7/22/2014 10:27:52 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