Today is a beautiful day so far for the markets, with the Dow and S&P 500 both up in the first hour of the new trading week. The financial sector is shining, too: Citigroup (C -0.65%), JPMorgan Chase(JPM -0.09%), and Wells Fargo (WFC -0.15%) are all moving in a nice, upward trajectory, as is Bank of America (BAC -0.14%).
Why the greenish glow? Citi may be rebounding after last week's negative hit from Charles Peabody, particularly since Scotiabank has deemed the dip a buying opportunity. And, despite all of the analysts piling on Wells Fargo, the concerns voiced by Sterne Agee regarding the slowing mortgage business and low rates don't seem to have made much of an impression on investors.
For Bank of America, today's upside is surely part of the sector swing, but may also have been influenced by some news on the ever-busy legal front. The Article 77 hearing featuring B of A has been put on hold until July, after a particularly ho-hum couple of days of testimony, because of the judge's full courtroom schedule. This could very well be interpreted by investors as good news, since the lack of drama and lessening sense of urgency may infer that things are going a bit more smoothly.
In the meantime, however, this break in the action could shift the spotlight onto another case, currently playing out in Boston. This involves homeowners suing B of A for fraudulently rejecting applications for loan modifications under the Home Affordable Modification Program, and testimony from former employees is making the bank look very bad indeed. This sort of negative press could hamper B of A's efforts to get back into the mortgage game, and once investors digest this, things could go south for the big guy very quickly -- perhaps even later today.
