Bank stocks -- while in the spotlight because of a JPMorgan Chase (JPM) investor day and improving prospects of a $8.5 billion mortgage settlement for Bank of America (BAC) -- took second billing to the Dow Jones Industrial Average, which above 13,000 for the first time since May 2008.
The KBW Bank Index (I:BKX) was up less than 1% to close at $45.56, beating broad market gains at the Dow, S&P 500 and Nasdaq.
Citigroup's shares are now up over 27% year-to-date on following a 44% drop in 2011. The bank was boosted by news from the Federal Deposit Insurance Corporation that bank earnings rose to $119.5 billion for 2011, a 40% from the previous year and the most since 2006. Banks like Citigroup with assets of $10 billion or more accounted for 83% of total bank earnings, said the FDIC.Meanwhile, Bank of America gained 1% to $8.12, adding to a near 50% year-to-date share rally, after a 58% 2011 fall. The bank was boosted by signs that it may close a $8.5 billion settlement on residential mortgage related securities issued by its Countrywide Financial division, which it acquired in 2008. An investor lawsuit contesting the settlement has been New York state courts, potentially paving the way for it and other banks mortgage-related lawsuits, with other large players like Citigroup and JPMorgan benefitting. In late day news, Wells Fargo revealed that it has received a Wells Notice from the Securities and Exchange Commission, which indicates that the biggest home lender in the U.S. may face civil claims on its sale of mortgage-backed securities. The disclosure was made in Wells Fargo's annual report. JPMorgan rose 0.4% to $39.21 as it hosted an investor day conference just a day after CLSA analyst Mike Mayo said the bank should split itself to realize the full value of its businesses. The nation's largest bank also received weekend press, when Warren Buffett said that investors should focus JPMorgan's share buyback plans. In the investor day, the head of JPMorgan's investment bank Jes Staley disclosed that the bank's trading division made $375 million in quarterly revenue from credit trading in 2011, the strongest trading category of the bank, followed by interest rate swaps, where it brought in $350 million in revenue per quarter.
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