The market's three major indexes were all up slightly on Wednesday, with the Nasdaq leading the way:
Dow Jones Industrial Average (INDEX: ^DJI)
Nasdaq (INDEX: ^IXIC)
S&P 500 (INDEX: ^GSPC)
For those who need their daily update on the Greece situation, Bloomberg reports word of a draft agreement involving Greece, the European Union, and the International Monetary Fund. As part of the permanent spending cuts, there would be a 20% drop in the minimum wage and lower pension payments. To put that in perspective, if the U.S. took a similar measure, its minimum wage would fall from $7.25 to $5.80.
Looking at the individual Dow components, only one of the 30 stocks rose or fell more 2% or more today: Bank of America (NYS: BAC) rose 3.6%. Year to date, the financial sector has led all 10 of the S&P 500 sectors (up more than12%). In a rally, the most beaten-down stocks generally pop the most. This has been true for Bank of America, as it has risen 46% after breaking above $8 a share for the first time since September.
Aside from a general rally in the stock market, the large banks,including Bank of America and fellow Dow bank JPMorgan Chase (NYS: JPM) , are nearing a federal and state settlement on a bevy of mortgage and foreclosure-related issues. The settlement could cost B of A, JPMorgan, Wells Fargo, Citigroup, and Ally Financial up to $25 billion. Although the potential sums aren't trivial, the market generally rewards additional certainty. That may be part of what we're seeing in Bank of America's run-up.
As you put the daily news in perspective and hunt for long-term buys, consider reading a free report I wrote called "The Stocks Only the Smartest Investors Are Buying." It details a bank much smaller than Bank of America that has some of the best operational numbers I've ever seen. Read the report and find out its name.
At the time thisarticle was published Anand Chokkaveluowns shares of Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup. He also owns warrants in JPMorgan Chase, Wells Fargo, and Citigroup, and long-dated options in Bank of America. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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