Dow Jumps Higher As Banks Rebound

Bank investors who took advantage of yesterday's news-related drop got rewarded today.

Apr 29, 2014 at 9:05PM

Tuesday marked another positive day for the Dow Jones Industrials (DJINDICES:^DJI) which rose almost 87 points to climb back within 100 points of an all-time record high. Although largely positive earnings reports got most of the credit from market commentators for today's gains, strength in the Dow's financial sector contributed substantially to the averages positive close today. Just as Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM) got punished for the bad news that Bank of America (NYSE:BAC) had yesterday, those banks regained some of their lost ground today as investors weighed took a calmer, longer-term approach to the situation and looked more broadly at the prospects for the entire banking sector.


Dealing with B of A
Bank of America got most of the attention yesterday, with its stock falling the most after it announced it would have to suspend its planned share buyback and dividend increase. But what made much less sense were the declines that Goldman Sachs and JPMorgan Chase suffered, as there was no evidence that they had done anything wrong in accounting for any similar exposure they might have had on their books. Today, B of A bounced back by 2%, regaining about a third of its Monday decline.

But the B of A episode is far from the most important issue affecting Goldman Sachs, JPMorgan Chase, Bank of America, and other major U.S. banks. Positive data on home prices helped pull more homeowners further out of their underwater-mortgage situations, potentially helping the financial stocks both within and outside the Dow Jones Industrials to the extent that they still have any bad-loan exposure from the housing bust and ensuing financial crisis. Yet commentators also noted some signs of weakness in the housing sector, a key component of what the Federal Reserve looks at in assessing the strength of the overall economy and its policy responses to current conditions.


Flickr source.

Along those lines, the Fed's Open Market Committee meets today and tomorrow, and most investors expect the Fed to continue tapering down its bond-buying activity under quantitative easing. So far, the Fed's taper hasn't produced anything close to the chaos in the bond market that many had expected, with rates actually having fallen so far in 2014. Eventually, most analysts agree that interest rates will have to rise, and that could continue to weigh on JPMorgan Chase's and Bank of America's mortgage origination business as well as Goldman Sachs' bond-trading division. But the fact that the Fed has thus far orchestrated an orderly exit from quantitative easing, rather than the turbulent environment for interest rates in the middle of last year, has reassured markets generally and investors in financials specifically.

JPMorgan Chase, Bank of America, and Goldman Sachs will still have to keep working hard to grow and regain their former positions atop the U.S. economy. Yet as long as they keep enjoying favorable economic conditions that bolster modest but consistent economic growth, the Dow's current and former bank stocks should prosper in the long run.

Big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under Wall Street's radar. To learn about about this company, click here to access our new special free report.

Dan Caplinger owns warrants on Bank of America and JPMorgan Chase. The Motley Fool recommends Bank of America and Goldman Sachs and owns shares of Bank of America and JPMorgan Chase. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers