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Bank of America Corp (BAC): A Little Optimism Boosts the Dow Jones Industrial Average (.DJI)’s Mood

Extending the prior trading session’s gains, the Dow Jones Industrial Average (INDEXDJX:.DJI) is up in the first few hours of trading this morning. Following the downward spiral the market took at the end of last week, investors are looking for news that can help them regain some losses. So far, investors are feeling more optimistic this morning as the Dow Jones Industrial Average (INDEXDJX:.DJI) sits at a 82-point gain as of 11:30 a.m. EDT.

This morning’s news
Much to the dismay of economists, the Commerce Department revised the first quarter’s GDP numbers, showing economic growth of 1.8% instead of 2.4%. While this is not great news for a recovering economy, it may be helping assuage some investor fears about the Fed’s timeline for cutting back its stimulus policy.

While the market may finally be coming to terms with the fact that the Fed will base its cuts on data — and that the current projections from the Fed are more optimistic than what we’ve seen so far — being able to see an end to the “easy money” environment is still a hard pill to swallow. So when previously reported economic data is revised downward, possibly pushing out the Fed’s timeline, the market can relax a little bit.

Banks follow suit
Bank of America Corp (NYSE:BAC)

While the Dow Jones Industrial Average (INDEXDJX:.DJI) makes steady improvement this morning, its bank stock components are mixed. Bank of America Corp (NYSE:BAC) is up 0.45%, while JPMorgan Chase & Co. (NYSE:JPM) is just below breakeven. While both banks were hit last week by the Fed announcement and then Monday’s Chinese liquidity scare, JPMorgan Chase & Co. (NYSE:JPM) is the lone loser this morning. Even Citigroup Inc (NYSE:C), which has the biggest exposure to the Asian markets of the big four banks, is back in positive territory this morning.

Some of the drag may be coming from investors’ concerns that the housing market’s steady recovery could stall or plateau in the coming months. Both JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) commanded the largest share of new mortgage origination in 2012, so a slowdown in new activity might slow their revenue growth.

Bank of America Corp (NYSE:BAC) has been seeking a bigger seat at the table for mortgages, but with recent allegations of stonewalling qualified foreclosure customers for loan modifications, the bank may find fewer new buyers willing to walk through its doors. But with previous customer service improvement plans highly publicized, don’t be surprised if there’s a new one coming for mortgage customers.

The market may take a little bit of time to recover from the Fed-induced sell-off, but for the long-term investor it’s important to keep an eye on the fundamentals of your investments. If you’ve been following the Bank of America Corp (NYSE:BAC) recovery story, the latest mortgage-related saga may keep it low for a while.

The article A Little Optimism Boosts the Dow’s Mood originally appeared on and is written by Jessica Alling.

Fool contributor Jessica Alling has no position in any stocks mentioned — you can contact her here. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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

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