Why Bank of America Corp (BAC) and Its Peers Were Down Today: Goldman Sachs Group, Inc. (GS)

Make no mistake about it — the past few weeks have been huge for banks. On the heels of the Federal Reserve’s announcement last week that most of the 18 stress-tested lenders could return more capital to shareholders this year than last, shares in Bank of America Corp (NYSE:BAC) and others have soared while others such as JPMorgan Chase & Co. (NYSE:JPM) have plummeted. For today, however, all four of the nation’s largest banks are in the red.

Bank of America Corp (NYSE:BAC)

Although there have been a number of intervening events since last week, it’s impossible to deny that the afterglow of the Fed’s comprehensive capital analysis and review process is still largely dictating the recent performance of banks. On one hand, Bank of America Corp (NYSE:BAC)’s proposed $10.5 billion buyback — split between $5 billion for common stock and $5.5 billion for preferred — exceeded the vast majority of analyst expectations. And as a result, its shares have rallied to their highest point since April 2011 even after falling marginally today.

On the other hand, while shares of JPMorgan are also significantly higher than they’ve been for the past few years, they’re down by more than 4% since the end of last week — that is, when the central bank singled it and Goldman Sachs Group, Inc (NYSE:GS) out for “weaknesses in their capital planning processes” — click here to read more about JPMorgan’s performance and here for Goldman’s.

Last Friday, moreover, a bevy of current and former JPMorgan executives were dragged before Congress to answer questions about last year’s London Whale scandal, in which the bank lost more than $6 billion due to ostensibly rogue bets made by traders in London. And to add insult to injury, it was reported earlier this week that the Office of the Comptroller of the Currency, one of JPMorgan’s primary regulators, had previously downgraded its rating of the bank’s executive to a level that signifies “needs improvement.”

Finally, if all this wasn’t enough, the nation’s largest banks — including those listed above as well as Citigroup Inc. (NYSE:C) and others — have now found themselves in the crosshairs of yet another legal battle. As my colleagues Matt Koppenheffer and David Hanson discussed here, the publically administered mortgage giant Freddie Mac has filed a lawsuit against 15 major lenders over their roles in the LIBOR manipulation scandal. The purported losses amount to $3 billion.

Given all of these issues, it’s arguably a surprise that any bank stocks are higher this week. And in the absence of any other explanations, it seems clear that better or worse-than-expected capital returns remain the primary catalyst in both directions.

The article Why Bank of America and Its Peers Were Down Today originally appeared on Fool.com and is written by  John Maxfield.

Fool contributor John Maxfield owns shares of Bank of America. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of Bank of America, Citigroup Inc (NYSE:C) , and JPMorgan Chase & Co (NYSE:JPM).

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!