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.

Comments
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

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

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!