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. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

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!