This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bank of America Slumps on Fed Confusion: Financial Loser

NEW YORK ( TheStreet) - Bank of America (BAC - Get Report) shares were slumping after a string of speeches by key Federal Reserve officials continued to muddle investors' expectations of the Central Bank's next policy action.

Among large-cap lenders, Bank of America shares were falling the most in Friday trading, down over 1% to $12.86 in Friday trading. Regions Financial (RF - Get Report) and Zions Bancorp (ZION - Get Report) led banking industry share price declines, as the financial sector underperformed slight losses on the S&P 500 Index.

Financial sector stocks remain volatile as the Fed seeks to clarify its policy position and communication surrounding its $85 billion a month in mortgage and long-term Treasury bond purchases and the federal funds rate, which remains between 0% and 0.25%.

After Fed governor Jerome Powell said on Thursday the economy was showing signs of a strengthening recovery and New York Fed president William Dudley hinted at further monetary easing if a labor markets don't improve, a set of Friday communications continued to create a lack of consensus among officials at the central bank.

Federal Reserve governor Jeremy C. Stein said Friday the central bank's bond buying and zero interest rate policy hasn't created an unhealthy amount of risk taking in the financial system. Tradeoffs between financial stability and the Fed's work to spur asset prices still favor an accommodative stance, Stein said.

Stein also said Chairman Ben Bernanke's recent discussion of the economic data the Fed will consider as it eventually slows and ends a $85 billion a month bond buying program was a decision to give specificity to markets beyond previous guidance of "substantial progress" in the U.S. economic recovery.

Speaking at the Council of Foreign Relations, Stein noted that despite a significant rise in bond yields since Bernanke's June 19 comments, there has been no change to the Fed's bond buying. He did acknowledge there may have been a change in market expectations and a possible of re-jiggering of discount rates used by investors on Wall Street.

Bernanke is not expected to seek reelection to his chairmanship in 2014, given comments from President Barack Obama to 60 Minutes. The Fed chair's 'lame duck' status may explain the central bank's confused message in recent weeks.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ZION $26.93 -0.26%
BAC $15.41 0.13%
MTB $126.26 -0.58%
RF $9.46 0.11%
USB $43.49 -0.41%

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs