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Why Bank of America Is Up This Week

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As far as the big banks go, Bank of America (NYSE: BAC  ) is the trend bucker this week, up a solid 1.66% as the trading week comes to an end. Chalk that happy performance up to a continuing afterglow from the Federal Reserve's stress tests.

The tale of the tickers
But before we delve into that, here's a quick overview of the superbank's peers and the market for the past week:

  • Citigroup (NYSE: C  ) is down 1.52%.
  • JPMorgan Chase (NYSE: JPM  ) is down 0.76%.
  • Wells Fargo is down 1.36%.

Running counter to the general big-bank gloom is the market overall, with the Dow Jones Industrial Average up 0.62%, the S&P 500 up 0.67%, and the Nasdaq up 0.93%.

Stress-test heaven?
Last week at this time, bank investors were digesting the results of the Fed's annual stress tests, or Comprehensive Capital Analysis and Review. And for B of A investors, there were some genuinely tasty menu items to swallow.

The bank did well, as good as or better than some of its peers. And good enough for shareholders to be rewarded with $5 billion in share buybacks. Hence, this week's generally happy feeling that seems to be carrying the stock along in positive territory, even while other big banks are ending the week in the negative.

So why aren't B of A's peers also basking in the CCAR afterglow? JPMorgan investors got a bit of shock last week. The country's biggest bank passed its stress test, but its proposed capital actions were approved on the condition that Jamie Dimon and his team go back to the drawing board to resubmit its plans.

And Citi investors might be reeling from CEO Michael Corbat's decision not to increase the bank's dividend or buy back shares, despite the its impressive performance on the CCAR. In my opinion, investors ought to cheer that move. To me, it's a sign that Corbat is putting the health of the bank first. 

Money in the bank
We all know, of course, that the market can be fickle: up one week and down the next. The most important thing is to focus on the long term. That's what investing Foolishly is all about. The market will do what the market will do, sometimes for no apparent reason. But as long as the companies you're invested in have solid fundamentals, your money is in the right place. 

Looking for in-depth analysis on B of A? If so, look no farther than this Motley Fool premium research report. In it, analysts Anand Chokkavelu, CFA and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations and give you three reasons to buy and three reasons to sell everyone's favorite superbank.

As an added bonus, you’ll receive a full year of free updates and expert guidance as key news breaks. To claim your copy, simply click here now.

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Related Tickers

8/23/2016 4:01 PM
BAC $15.35 Up +0.17 +1.12%
Bank of America CAPS Rating: ****
C $46.59 Down -0.07 -0.15%
Citigroup CAPS Rating: ***