Stocks are headed lower this afternoon as investors brace for a disappointing earnings season. The quarterly ritual unofficially kicks off after the closing bell today when Alcoa (NYSE: AA), the nation's largest producer of aluminum, reports earnings for the fourth quarter of 2012. If the current direction of the market is any indication, then it may be wise to set your expectations low, as the Dow Jones Industrial Average (INDEX: ^DJI) is down by 78 points, or 0.58%, as of 2:45 p.m. EST.

Among companies making news today, shares of both JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC), the nation's two largest banks by assets, are depressed one day after the companies reported a multibillion-dollar settlement resolving claims related to faulty mortgage-foreclosure practices.

The move came on the same day that the nation's largest lenders had to submit their 2013 capital plans to regulators as a part of the Federal Reserve's now-annual stress test. As I discussed over the weekend, this could end up being either an epic victory for B of A or a monumental defeat. Banks that fare well will be slated for approval by the Fed to raise their quarterly dividend payouts and/or initiate or increase share buyback programs, both of which would serve as potent catalysts for their share prices.

Speaking of epic victories, B of A simultaneously announced a $10.3 billion settlement with Fannie Mae over faulty mortgage sales. The deal eliminates the uncertainty surrounding the bank's potential liability for repurchase claims from the government-sponsored agency. Earlier last year, I had estimated these claims could range in liability anywhere between $4.7 billion and $40 billion. As a result, while yesterday's settlement was hefty, it was certainly better than it could have been.

Click here to see why my colleague John Grgurich thinks this settlement is the last shoe to drop for the nation's second-largest lender.

If these two massive occurrences weren't enough, moreover, Bank of America also announced yesterday that it had entered into an agreement with Nationstar Mortgage (NYSE: NSM) and Walter Investment Management (NYSEMKT: WAC) under which the latter two mortgage servicing companies will pay a collective $1.8 billion for more than $300 billion in mortgage servicing rights from B of A. The deal is part of a greater effort by B of A to shed noncore assets and focus on its main customer base. Shares of both Nationstar Mortgage and Walter Investment Management soared on the news.