Shares of Bank of America are trading lower today as investors await tomorrow's housing data and the release of the minutes from the Federal Reserve's most recent open market committee meeting. Roughly halfway through the trading session, Bank of America stock is off by $0.11, or 0.83%.
There have been a number of positive developments in the banking industry of late that have helped fuel share prices of the nation's largest lenders. Last week, the Commodities Futures Trading Commission softened a key rule impacting the $700 trillion derivatives market. In an effort to increase transparency and facilitate efficient price discovery, the CFTC had originally proposed requiring over-the-counter derivatives brokers to seek quotes from at least five counterparties. It has now reduced the number to two. While this may not be in the interest of consumers, there's little doubt it plays into the hands of Wall Street firms that have looked to this opaque market for significant profits over the last few years.
Also, it was reported yesterday that the New York Attorney General will delay its lawsuit against Bank of America and Wells Fargo for alleged violations of the National Mortgage Settlement. The AG's office announced its decision to sue roughly two weeks ago, citing 339 violations of the landmark settlement by the two mortgage giants. While there was much discussion over whether the state legal office had the authority to file the suit, the delay was purportedly triggered by the recent filing of new complaints by aggrieved home owners that the AG would like to use as further evidence of violations.
Looking forward, there are two things that bank investors will be watching particularly closely this week. First, on Wednesday, the Federal Reserve is set to release the minutes from its most recent open market committee meeting. While most analysts expect the central bank to continue on its course of buying $85 billion in bonds each month and thereby fueling equity prices, there's nevertheless a lingering doubt about how long it will continue doing so.
And second, though also on Wednesday, the National Association of Realtors will release existing home sales data for the month of April. This will be followed on Thursday by the Commerce Department's report on new home sales. Upbeat data here will be particularly beneficial for banks like Wells Fargo and Bank of America that look to mortgage originations to fuel the bottom line.
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