Big banks had an exceptionally fantastic week as investors showered all with share price boosts. Bank of America (BAC -0.13%), Citigroup (C -0.32%), JPMorgan Chase (JPM 0.49%), and Wells Fargo (WFC -0.56%) all rode the wave higher and higher, and all closed very near their 52-week highs.
For B of A, the meteoric rise is a bit of a stumper, considering the fact that it is facing a judge in a Manhattan courtroom this week, and the outcome of this hearing could have dire consequences for the big bank. Apparently, investors have faith -- and it's showing.
Citi had some good news, settling up with insurer Allstate over some cruddy MBSes, in a "mutually agreeable" manner, according to Bloomberg. JPMorgan and Wells likely felt pretty smug as Fannie Mae plummeted this week, along with Freddie Mac -- less than one week after telling Bloomberg how it has been squeezing mortgage originators out of profits by cutting the banks out of the lucrative securitization process.
For Wells, today promises to be another good day, and not just because of the general financial sector rally. In addition to the uplifting housing news this week, CEO John Stumpf spoke at an investors' conference in New York and took on a very prescient subject: interest rates. In plain language, Stumpf acknowledged the challenges that the current environment presents and even admitted that his bank may have erred in leaving too much cash on the sidelines, waiting for the big change-up to occur.
It's not very often that a big bank CEO admits to being wrong, but it's just this kind of straight shooting that has kept Wells' figurative head above water when peers were in danger of drowning. In the first hour of trading, Wells is down a smidge, but I think it will rally, and then some. Investors want honesty, and Wells will surely be the recipient of some appreciation on that score.
