After opening down 2%, about an hour and a half into the trading day, Bank of America (NYSE:BAC) stock is now down only 0.8%. That's some progress. And promising jobs news should keep things moving in the right direction today for the broader markets overall, while countering some unsettling news affecting the banking sector in particular.

Take this job and add it
Payroll giant ADP is reporting that the U.S. economy added 188,000 private-sector jobs in June, beating economists' expectations by 28,000. And while May payrolls were revised down by 1000, fewer people filed for unemployment insurance last week.

Up next is the federal government's June jobs report, due out Friday. At the moment, overall job growth is expected, with the rate of unemployment predicted to drop from 7.6% to 7.5%.

Foolish bottom line
All in all, this is encouraging economic news, so why the general market and sector gloom today? Continuing investor unease over the future of quantitative easing is one factor, and anxiety over the health of China's banking system is another.

For banking in particular, the Fed also dropped another bit of a bomb yesterday: chairman Ben Bernanke announced that U.S. banks would need to begin abiding by the Basel III international capital requirements starting in January, which call for higher capital requirements. And of course, the more capital a bank has to hold onto, the less it has to lend out or leverage, and therefore the less profit it can make.

The Fed is expected to ask even more of American banks, especially those that rely on short-term lending for their survival. Expect this to affect the pure investment banks like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) more so than B of A or Citigroup (NYSE:C). And the good news for B of A and Citi, both banks are essentially where they need to be when it comes to Basel III already.

There's a lot of volatility out there. Just look at the bond markets: Be happy the equity markets aren't tanking like the bond markets are. And with QE, China, and Basel III on investors' minds, look for that volatility to stay around for the indefinite future. 

Fool contributor John Grgurich owns shares of Goldman Sachs and Citigroup. Follow John's dispatches from the not-so-muddy trenches of big-banking and high-finance on Twitter @TMFGrgurich.

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