Thirty minutes into trading, and Bank of America Corp (NYSE:BAC) was already up 0.96%. Following on the heels of yesterday’s gain of 0.47%, does this mean last week’s Fed-induced market rout is over? And is there something else at work boosting the superbank’s performance?
When in doubt, panic
To quickly recap, one week ago today Federal Reserve chairman Ben Bernanke announced that the central bank may dial back its program of monthly bond purchases later this year if economic data continues to be encouraging. He made a point of emphasizing the “may” and “if” parts of the plan, but markets around the world freaked out anyway.
Add to this news out of China that its banks were experiencing a credit crunch, potentially in the style of America’s own 2008 financial crisis, and investors didn’t know what to do, so they panicked.
Foolish bottom line
Yet here we are at what looks to be the start of day three of a general market rally. Along with Bank of America Corp (NYSE:BAC), all of the Big Four banks are trading in the green today, and all three of the market’s major indices are in positive territory, as well. All of these good tidings despite the fact that the Commerce Department just revised first-quarter economic growth down to 1.8%, from the original estimate of 2.4%.
That’s quite a significant change. As the market absorbs this new information, expect to see a slowdown of this two-day market bounce we’re in the middle of. Still, just the fact that things are looking so good already despite this GDP-growth revision is encouraging: potentially a sign that investors have adjusted to last week’s “shocking” news from the Fed, which really shouldn’t have been all that shocking: Bernanke’s been talking about tapering for months.
Also at work boosting Bank of America Corp (NYSE:BAC)’s performance is good news from the U.S. housing market. The S&P/Case-Shiller home-price index showed a 12.1% increase in the price of homes for April, the largest year-over-year gain for seven years. And new home sales for May almost hit a five-year high. Bank of America Corp (NYSE:BAC) is the country’s third-biggest home lender, after JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC), which are second and first, respectively. Any good news out of the housing market is going to help these mortgage giants, and they’re all performing well today.
Regardless of why it’s happening, Bank of America Corp (NYSE:BAC) investors should just be happy they’re making back some of the gains they so abruptly lost last week. Wasn’t it Warren Buffett who said when others are fearful, be greedy? There’s a lot of fear out there right now, and while stock prices are recovering, many companies are still “on sale.” As such, this may be the perfect time to take Buffett up on his advice and buy.
The article Bank of America Continues to Shine Today originally appeared on Fool.com and is written by John Grgurich.
Fool contributor John Grgurich owns shares of Citigroup and JPMorgan Chase. Follow John’s dispatches from the not-so-muddy trenches of big-banking and high-finance on Twitter @TMFGrgurich.The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a scintillating disclosure policy.
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