Bank of America Continues to Shine Today

Thirty minutes into trading, and Bank of America (NYSE: BAC  )  was already up 0.96%. Following on the heels of yesterday's gain of 0.47%, does this mean last week's Fed-induced market rout is over? And is there something else at work boosting the superbank's performance?

When in doubt, panic
To quickly recap, one week ago today Federal Reserve chairman Ben Bernanke announced that the central bank may dial back its program of monthly bond purchases later this year if economic data continues to be encouraging. He made a point of emphasizing the "may" and "if" parts of the plan, but markets around the world freaked out anyway.

Add to this news out of China that its banks were experiencing a credit crunch, potentially in the style of America's own 2008 financial crisis, and investors didn't know what to do, so they panicked.

Foolish bottom line
Yet here we are at what looks to be the start of day three of a general market rally. Along with B of A, all of the Big Four banks are trading in the green today, and all three of the market's major indices are in positive territory, as well. All of these good tidings despite the fact that the Commerce Department just revised first-quarter economic growth down to 1.8%, from the original estimate of 2.4%. 

That's quite a significant change. As the market absorbs this new information, expect to see a slowdown of this two-day market bounce we're in the middle of. Still, just the fact that things are looking so good already despite this GDP-growth revision is encouraging: potentially a sign that investors have adjusted to last week's "shocking" news from the Fed, which really shouldn't have been all that shocking: Bernanke's been talking about tapering for months.

Also at work boosting B of A's performance is good news from the U.S. housing market. The S&P/Case-Shiller home-price index showed a 12.1% increase in the price of homes for April, the largest year-over-year gain for seven years. And new home sales for May almost hit a five-year high. B of A is the country's third-biggest home lender, after JPMorgan Chase (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) , which are second and first, respectively. Any good news out of the housing market is going to help these mortgage giants, and they're all performing well today.

Regardless of why it's happening, B of A investors should just be happy they're making back some of the gains they so abruptly lost last week. Wasn't it Warren Buffett who said when others are fearful, be greedy? There's a lot of fear out there right now, and while stock prices are recovering, many companies are still "on sale." As such, this may be the perfect time to take Buffett up on his advice and buy. 

Learn about the only big bank built to last
Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable stand out. In a sea of mismanaged and dangerous peers, it stands out as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.


Read/Post Comments (1) | Recommend This Article (2)

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.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2510892, ~/Articles/ArticleHandler.aspx, 9/14/2014 10:18:41 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