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Why Bank of America Is Booming Today

By John Grgurich - Apr 24, 2013 at 10:56AM

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Last week's panic is beginning to subside, pure and simple.

What goes down must come up. That succinctly describes the last five days of trading, not just for Bank of America (BAC -1.71%) but for the rest of the big four banks.

Up, up, and away
But before we dive into that, here's a quick overview of where B of A and its peers are at the start of the trading day:

  • B of A is up 1.16%.
  • Citigroup (C -0.06%) is up 0.77%.
  • JPMorgan Chase (JPM -0.82%) is up 0.62%.
  • And Wells Fargo (WFC -0.79%)-- never quite as volatile either up or down as its big-four peers--is up 0.54%.

Foolish bottom line
If you go to your favorite finance website, pull up each of the big four banks, and look at their performance on a graph over the last five business days, you'll see pretty much the same thing: big drops on Wednesday and Thursday, followed by slow climbs out of the basement on Friday and Monday, and sizable gains yesterday.

The big crash last Wednesday came on the results from B of A's first quarter. Earnings were healthy -- healthier than most investors probably had a right to expect -- but because the superbank missed analyst expectations (by two measly cents) a general sector landslide started, which took down not only B of A, but the rest of the big four.

There really aren't any other plausible explanations for last Wednesday's big-four dive and their slow but inevitable pullout. The market freaked out over a $0.02 earnings-per-share miss. That's it. And now the market is finished freaking out. End of story. So what can you expect to see today? Like yesterday, expect to see gains across the banking sector as last week's panic begins to subside.

Always remember that investing Foolishly is about investing for the long term. Once you begin investing, it doesn't take long to see crazy up-and-down gyrations like this. The most important thing is to keep an eye on your company's fundamentals. Check in once a quarter. If you like what you see, keep your money right where it is. As for Wall Street expectations, feel free to blithely ignore those. 

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Stocks Mentioned

Bank of America Corporation Stock Quote
Bank of America Corporation
$33.86 (-1.71%) $0.59
Citigroup Inc. Stock Quote
Citigroup Inc.
$49.75 (-0.06%) $0.03
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
$117.34 (-0.82%) $0.97
Wells Fargo & Company Stock Quote
Wells Fargo & Company
$41.67 (-0.79%) $0.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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