Dow Climbs 87 As Bank of America and Pfizer Dominate Headlines

The three things you need to know for April 29.

Apr 28, 2014 at 11:00PM

We know. Your schedule is packed this week with NHL playoff games and early spring BBQ shenanigans. Now add to your list the two-day Federal Reserve policy meeting, a whole bunch of headline earnings reports, and Friday's big April jobs report. Despite major falls by tech stocks, the blue chip-packed Dow Jones Industrial Average (DJINDICES:^DJI) gained 87 points Monday to kick off the action-packed Wall Street week.

1. Bank of America drops after stress-test error comes to light
Whoops. Bank of America (NYSE:BAC) stock dropped 6% Monday when investors learned that the bank screwed up its "stress test" with the Federal Reserve Bank. The company admitted the mistake and said it will have to cancel its planned dividend increase and share buyback until it retakes the test.

In other words, it cheated by accident on its test. The Fed requires all banks to pass stress tests before being allowed to give dividends and other rewards to shareholders. Citigroup (NYSE:C) was embarrassed last month as one of the five banks that failed, while Bank of America rushed home to Charlotte, N.C., to show Momma its report card. But in the past weeks, BOA realized it miscalculated the value of some of its capital bonds issued by the bank's Merrill Lynch division, which unintentionally overstated the soundness of the bank.

Can you "recall" an email to the Federal Reserve Bank? No. But we feel for the analysts who screwed this up, and also for Bank of America for taking a month to notice the important error. It should be noted that the Fed didn't notice the mistake, either, in its review of Bank of America's performance, so shame on everyone.

We're sorry. The Bank decided Monday it's better to come clean about the mistake now than wait and keep fingers crossed that it goes unnoticed forever. It now has 30 days to resubmit its test. Until it proves that it can withstand another economic crisis without a bailout, there will be no increase to Bank of America's current $0.01-per-share current dividend. (Since 2008, shareholders have gotten just four pennies every year as a "reward" for owning part of the bank.)

2. Buffalo Wild Wings' spicy earnings
Slather yourself in these hot corporate earnings. Shares of food chain Buffalo Wild Wings (NASDAQ:BWLD) jumped over 4% in after-hours trading Monday after reporting a seriously satisfying first-quarter performance -- the company's $367.9 million in revenues over the past three months topped analysts' estimates of $363 million.

It's all about tech for the restaurant's new "Guest Service" initiative unveiled only a couple of months ago. Just in case you weren't already overwhelmed by the hundreds of TVs showing everything from NFL match-ups to the almighty Vanderbilt women's bowling team, Buffalo Wild Wings is adding table-side tablets for customers to play poker or trivia games while they wait. #ADD

We're serious about this initiative. Buffalo Wild Wings signed a deal with interactive entertainment firm NTM Buzztime last year and is adding "Guest Experience Captains" (terrible name) to help tech-challenged patrons. The company plans to unveil the system in each of its restaurants by 2015 -- just don't let one of Wild Wings' 16 corn fructose-enhanced sauces ruin your screen.

Interestingly, CEO Sally Smith disclosed that she sold over $214,000 of Wild Wings stock over the past week, leaving her equity stake worth around $11.4 million. Keep in mind that C-level execs and other insiders can't just drop their stock all willy nilly -- these VIPs with sensitive information on the company are restricted on selling their stock during certain periods of time and have to file with the SEC before officially dropping their stock on the market.

3. Pfizer wants to acquire British drug giant AstraZeneca
New York's biggest drug company is not 16 Handles (even though we swear that stuff is addicting). It's Pfizer (NYSE:PFE), and the Big Apple-based pharmaceutical firm wants to get bigger. The company announced that it's offering $99 billion to acquire British AstraZeneca. It would break the record Pfizer already holds for biggest takeover in the pharma industry, if the Brits agree to it.

If the deal goes down, Pfizer would jump across the pond to England. Pfizer said the combined company, while majority-owned by Pfizer shareholders, would reincorporate in the UK. This would save the company taxes and keep some proud Brits happy.

AstraZeneca is known for its prescription cholesterol medication Crestor, but it also has a nice portfolio of cancer treatment drugs, a focus for Pfizer. AstraZeneca's shares jumped 16% since Pfizer wants it so badly.

Pfizer made big profits with Lipitor until 2011. Then its patent ran out. This acquisition would bring in a ton of different revenue sources for the huge company so that its livelihood depended less on patented drugs that are eventually drowned in generic versions. AstraZeneca's board (which we imagine are in pinstriped suits with Union Jack cufflinks) is asking shareholders to be patient and let it make a recommendation before voting on Pfizer's offer.


  • The two-day Fed policy meeting begins.
  • First-quarter corporate rarnings: Coach, eBay, Merck.

MarketSnacks Fact of the Day: In 2011, popular cinnamon-flavored Fireball whiskey had $1.9 million in sales -- by 2013 the beverage enjoyed a whopping $61 million in sales, putting it ahead of Jameson Irish Whiskey and Patron tequila.

As originally published on

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Bank of America, Buffalo Wild Wings, Coach, and eBay and owns shares of Bank of America, Buffalo Wild Wings, Citigroup, Coach, and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers