Shares of Wells Fargo & Co (NYSE:WFC) have followed the larger market straight down into negative territory. With investors trying to determine the longevity of the current market surge, there are sure to be times when they pull back, bringing share prices lower — this morning may prove to be one of those times. So far, the momentum has brought the bank down 0.2% as of 10:30 a.m. EDT.
But for the long-term investor, there’s nothing to fear when it comes to Wells Fargo & Co (NYSE:WFC). Let’s take a look at some of the reasons the stock will stay strong going forward.
It’s hard to cover the pros for Wells Fargo & Co (NYSE:WFC) without mentioning Warren Buffett. The Oracle of Omaha has been a big selling point for the bank since Berkshire Hathaway‘s biggest holding is in Wells. At the recent annual shareholder meeting, Buffett once again reiterated his confidence in the banks and his strong position in Wells Fargo. It would appear that as the opportunities present themselves, Berkshire will continue to invest in new shares of the bank.
Rebuilding the housing market
As housing continues to strengthen, the banks are set to gain as well. With the past few weeks’ data showing a continued upward trend for new home lending, this is a great sign that the market is on the right track so far. Though the data shows that the majority of new loans are for refinancings (to take advantage of the low, low interest rates), new mortgages will come back online as the available home inventory meets demand.
Wells Fargo & Co (NYSE:WFC) was at the top of the 2012 mortgage originators list. Commanding an astonishing 29% of the market in the third quarter alone, with its closest competitor, JPMorgan Chase & Co. (NYSE:JPM)Â , only serving 10%. As the largest conventional bank in the country, Wells’ operations focus on lending for revenue growth, positioning it well for when the demand for new mortgages grows.
The good and the bad
Of course there’s going to be a hurdle for Wells Fargo & Co (NYSE:WFC) every now and again. The most recent is a possible lawsuit from the New York Attorney General’s office regarding violations the bank allegedly committed while servicing homeowners under the terms of a recent mortgage settlement. The NYAG has cited Wells and Bank of America Corp (NYSE:BAC) as having committed 210 and 129 individual violations, respectively.
Bank of America Corp (NYSE:BAC) has pushed back against the suit, saying that the AG needs to give the banks time to cure the alleged violations before suing because they have not been addressed. The bank noted that it just received the list of violations last week, so therefore the case cannot proceed until the allotted time has passed for the bank to make corrections.
Wells Fargo & Co (NYSE:WFC) is one of the strongest banks in the country, with traditional operations and solid growth. As today’s moves prove once again, a day’s action on the market is not indicative of a problem with the company or its stock. As a Foolish investor, keep an eye on the fundamentals — not on the ups and downs on any given day.
The article Here’s Why Wells Fargo Is Immune to Today’s Drop originally appeared on Fool.com.
Fool contributor Jessica Alling has no position in any stocks mentioned — you can contact her here. The Motley Fool recommends Berkshire Hathaway and Wells Fargo. The Motley Fool owns shares of Bank of America Corp (NYSE:BAC), Berkshire Hathaway, JPMorgan Chase & Co. (NYSE:JPM), and Wells Fargo.
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