Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why Bank of America Corp (BAC) Shares Are Stagnant

Shares of the nation’s second largest bank by assets, Bank of America Corp (NYSE:BAC), are oscillating between positive and negative territory today as investors struggle to balance the better-than-expected jobs report against concerns about banks in general and Bank of America more particularly.

Data released this morning showed that applications for unemployment benefits fell to the lowest level last week in more than five years. An estimated 324,000 people filed for jobless benefits last week according to the Labor Department. This represented an 18,000-person decline from the previous week and handily beat the consensus forecast calling for a figure of 345,000.

Blue-chip stocks are broadly higher on the heels of this news, with the Dow Jones Industrial Average and S&P 500 up by 0.77% and 0.88%, respectively.
Bank of America CorpBy comparison, Bank of America Corp (NYSE:BAC) has spent much of the morning in the red and is now only trading at even for the day.

The disparity here is probably the result of two factors. In the first case, the fight against too-big-to-fail banks is heating up. Last week, Senators Sherrod Brown of Ohio and David Vitter of Louisiana introduced legislation aimed at hobbling the nation’s largest banks. More specifically, it calls for higher capital requirements for lenders with more than $500 billion in assets on their balance sheets. Aside from Bank of America Corp (NYSE:BAC), this would directly impact JPMorgan Chase & Co. (NYSE:JPM)Citigroup Inc. (NYSE:C), Wells Fargo & Co (NYSE:WFC), Goldman Sachs Group, Inc. (NYSE:GS), and Morgan Stanley (NYSE:MS).

And in the second case, while Bank of America has made considerable progress in its legal fight to atone for the sins of Countrywide Financial, which the bank regrettably acquired in 2008, one of the biggest battles comes at the end of this month. On May 30, a judge in Manhattan is set to hear arguments on whether or not an $8.5 billion settlement, which the bank reached with various investors in Countrywide’s mortgage-backed securities, will be approved or not. If it isn’t, Bank of America Corp (NYSE:BAC) could potentially be on the hook for billions more dollars in added liability.

Taken together, in turn, these fears appear to be keeping a lid on Bank of America stock despite the otherwise upbeat news circulating throughout the market today.

The article Why Bank of America Stock Is Staying Put Today originally appeared on Fool.com and is written by John Maxfield.

John Maxfield owns shares of Bank of America. The Motley Fool owns shares of Bank of America Corp (NYSE:BAC).

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

Loading Comments...