Wells Fargo Got Some Good News -- so Why Is It Drooping?

The market crazies aren't over yet, it seems. After finishing up rather nicely yesterday, big banks Wells Fargo (NYSE: WFC  ) , Bank of America (NYSE: BAC  ) , and Citigroup (NYSE: C  ) are all dropping early this Friday morning, along with just about everything else, including the Dow and the S&P 500.

Why so glum?
While the overall market blahs are likely to blame for Wells Fargo's decline, it's still a bit disappointing. The bank was on an upward trajectory all week, ending each day higher despite the continued roiling in the markets. In addition, Wells and compatriot Bank of America had some good news yesterday, which I would have expected to buoy each banks' share price today.

Bloomberg reported late yesterday that Wells and B of A will not be facing another lawsuit from the New York Attorney General's Office regarding mortgage servicing concerns, after all. Last month, AG Eric Schneiderman announced his intent to sue over alleged breaches by the two banks in the terms of the $26 billion foreclosure settlement. Bank of America immediately told him that he had no right to do so, citing terms in the settlement stipulating that the banks should be given the right to cure any problems before enforcement action could be taken.

As it turns out, B of A was right. A committee that oversees the terms of the settlement noted that all banks that signed the agreement -- which include JPMorgan Chase (NYSE: JPM  ) and Citi, though those two weren't named in the action planned by Schneiderman -- must be given a chance to fix problems according to the terms of the settlement. Good news, indeed, but it is not being reflected in Wells' share price this morning.

Still, it is early yet, and the market may cheer up before too long. Fewer lawsuits in the offing is always good news for big bank investors, who may reward Wells after the good news sinks in. For now, though, things are looking glum.

There is obviously still some volatility in the markets, which may not subside today. As Foolish investors well know, a snapshot look at any given stock, taken in isolation, can be detrimental to the long-term view. The big picture, as always, is what really matters, and the normal ups and downs of the market are something that investors with their eyes on the prize take into consideration, knowing that these hills and valleys don't mean much of anything on their own, and are just part and parcel of the business of intelligent, long-term investing.

Many investors are terrified 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 rises above 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 (0) | Recommend This Article (1)

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.

Be the first one to comment on this article.

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: 2515437, ~/Articles/ArticleHandler.aspx, 11/27/2014 12:56:40 AM

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