Stock Market Today: Bank of America’s $12 Billion Penalty and Hertz’s Big Mistake

Why Bank of America and Hertz stocks are on the move today.

Jun 6, 2014 at 9:25AM

The Dow Jones Industrial Average (DJINDICES:^DJI) has gained 47 points in pre-market trading, suggesting a positive start for the stock market today. However, investors can expect plenty of volatility ahead as Wall Street digests this morning's jobs report from the Department of Labor.

The U.S. economy added 217,000 jobs in May, almost exactly what economists were expecting. The unemployment rate held steady at 6.3%. With revisions for March and April dropping employment by only 6,000, today's report means the economy has officially broken into positive jobs territory for the first time since the recession (although the population has grown a lot since then).


Meanwhile, news is breaking on Bank of America (NYSE:BAC) and Hertz (NYSE:HTZ) stocks, which should both see heavy trading today in today's session.

Bank of America is on the hook for "at least" $12 billion in legal payments to settle multiple government investigations into its past mortgage practices, according to a report today in The Wall Street Journal. The newspaper cited inside sources who said BofA may even have to pay "billions more" than that figure as its negotiations with the Justice Department are just heating up. That fact makes it likely the bank will pay more in legal penalties than its total net income in 2013, and also more than the record $13 billion that JPMorgan Chase (NYSE:JPM) paid last year for similar issues. Still, investors might be relieved by this news for two reasons. First, a settlement would resolve most of the company's legal obligations from the pre-financial-crisis days. Second, any deal would take the prospect of a long civil lawsuit by the Justice Department off the table. Bank of America's stock was up 0.3% in pre-market trading.

Hertz shares were lower by nearly 11% in pre-market trading after the car-rental company said it would delay the release of its first-quarter earnings report originally slated for next week. In preparing those quarterly results, Hertz found several "material" accounting errors that will force it to restate its financial statements for fiscal 2011 and to correct statements for 2012 and 2013 -- although a full restatement for those years is not out of the question.  The company said it plans to file its first-quarter results "as soon as practicable" and at the same time file an amendment to 2013's annual report. In the meantime, investors will be left wondering just how much they can trust the company's financial reporting over the past three years. 

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Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America, Hertz Global Holdings, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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." 

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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.

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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.

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