Why Bank of America Is Up Big This Week
With the stock up 5.20% for the week on the last day of trading, Bank of America investors deserve a five-day run like this after last week's traumatic post-earnings crash.
Here's a look at where B of A's peers are shaking out on the week:
- Citigroup is up 3.22%.
- JPMorgan Chase is up 2.85%.
- Wells Fargo is up 2.52%.
Nature may hate a vacuum, but it really loves a herd
All these banks had a terrible time of it last week, and are now in recovery mode. Again, it was all down to B of A's April 17 earnings report. Given the negative way the Big Four banks and the markets overall reacted, you would have thought it was awful news, but it really wasn't. Just the opposite, in fact.
B of A had a good first quarter by almost any measure, with net income up nearly 300% year over year and total revenue up 5% year over year. Deposits were up 5% year over year as well, which is vitally important to consumer-oriented B of A.
What mattered to the markets, though, was its earnings per share, which missed analyst expectations by $0.02. That's what caused B of A's plummet. And the Citi, JPMorgan, and Wells plummet. And the overall market plummet.
And this week, you're seeing the bounce-back. Investors finally figured out that nothing had fundamentally changed in B of A or any of the companies they had investments in, so money is rushing back into the each of the Big Four banks. Nature hates a vacuum, I suppose. But our own natures make us prone to follow the herd, occasionally off a cliff.
So B of A investors have made back the money they lost last week, and then some. And that's the way things go in the stock market, at least in the short term. But remember, Fools, you're in this for the long term. And as long as the companies in your portfolio have solid fundamentals, have faith that your money is in the right place.
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The article Why Bank of America Is Up Big This Week originally appeared on Fool.com.Fool contributor John Grgurichowns shares of Citigroup and JPMorgan Chase. Follow John's dispatches from the bleeding edge of capitalism on Twitter @TMFGrgurich. The Motley Fool recommends and owns shares of Wells Fargo. It also owns shares of Bank of America, Citigroup, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. 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 simply cracking disclosure policy.