Is Bank of America Having a CCAR Hangover Today?

Last week saw a party-hearty atmosphere for the overall market, and financials in particular. No doubt this was due to the star turns put in by Bank of America (NYSE: BAC  ) and Citigroup (NYSE: C  ) on the stress tests and Comprehensive Capital Analysis and Review, in which both banks strutted their capital strength.

After all the revelry, this morning finds both the Dow (DJINDICES: ^DJI  ) and the S&P 500 (SNPINDEX: ^GSPC  ) looking sickly as they both continue with the slippage begun last Friday. For banks, most have what seems to be the equivalent of a Monday morning hangover as they slide downward, regardless of their respective grades on the Federal Reserve's tests.

For JPMorgan Chase (NYSE: JPM  ) and Goldman Sachs (NYSE: GS  ) , the plunge is somewhat expected, since both banks will be required to tweak their capital plans and resubmit them to the Fed. But what about Citigroup and Bank of America? Why are they looking so green around the gills today?

Capital plans approved
Both banks were given the go-ahead to pursue stock repurchases but did not request a dividend raise. While Citi's $1.2 billion buyback plan is respectable, B of A will be buying up an astounding $10.5 billion in outstanding shares -- and that, combined with other issues, may be at the root of its lethargy so far today.

While a buyback is surely a good thing for investors, the excitement over the Fed test win may be becoming blunted now as the realization that there will be no dividend raise starts to sink in. In addition, more than half of the shares to be repurchased are of the preferred variety.

This is good for all investors, since those shares, unlike common stock, do get a nice payout. But investors may see this move as B of A trying to pay back an emergency infusion of cash from a high-profile investor rather than rewarding the regular Joes and Janes. Can you say "Warren Buffett"?

At any rate, trading is heavy in Bank of America today, and the week is young. Perhaps the hangover will wear off, to be replaced with a well-earned appreciation for just how far the bank has come in the past year. After all, as Foolish, long-term investors, we recognize the need to keep the one-day jumps and jives of a stock in perspective. Even stocks have good days and bad days, so it's important to realize that sometimes they're not portents of dire news, but merely squiggles that we can safely ignore. 

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