Financial Winners and Losers: BofA
Updated from 2:23 p.m. EDT
Bank stocks rallied Wednesday, one day ahead of the official results of the government's stress tests, on several leaked reports about the capital levels of different financial institutions.
Bank of America
(BAC) - Get Bank of America Corp Report
shares slid in the premarket session following reports that the government told the bank it would need up to $34 billion in capital, a far greater number than the $10 billion number thrown around earlier in the week.
However, shares rebounded and finished higher by more than 17.1% as ADP said April job losses were less than expected, mitigating the impact of the stress test, and investors figured out that the bank had options for meeting the requirement anyway, including converting the government's $45 billion investment of preferred shares into common stock.
Meanwhile, several media reports citing people briefed on the results on the stress tests results said that
Citigroup
(C) - Get Citigroup Inc. Report
would need to raise $5 billion, less than the $10-billion figure thrown around earlier in the week. Citigroup rallied 16.6% to $3.86.
Late in the afternoon,
Bloomberg
reported that
GMAC
, the financing arm of
General Motors
TheStreet Recommends
(GM) - Get General Motors Company Report
is in need of $11.5 billion, and
Wells Fargo
(WFC) - Get Wells Fargo & Company Report
needs $15 billion.
GM fell 10.3%, while Wells Fargo shares jumped 15.6%.
The same report said that
Goldman Sachs
(GS) - Get Goldman Sachs Group, Inc. Report
,
Morgan Stanley
(MS) - Get Morgan Stanley Report
,
MetLife
(MET) - Get MetLife, Inc. Report
,
JPMorgan Chase
(JPM) - Get JPMorgan Chase & Co. Report
,
American Express
(AXP) - Get American Express Company Report
and
Bank of New York Mellon
(BK) - Get Bank of New York Mellon Corporation Report
do not need any additional funds.
The Wall Street Journal
reported separately that
Regions Financial
(RF) - Get Regions Financial Corporation Report
was told by the government to raise additional funds. The stock finished higher by 6.2%.
The official results of the government's stress tests are expected after the close of trading Thursday, with several banks holding conference calls later in the day.
Goldman rose 3%, Morgan shares added 4.8%, MetLife surged 16.7%, JPMorgan climbed 6.9%, Bank of New York Mellon shares rallied 11.1%, and American Express rose 2.2%.
Elsewhere,
The Wall Street Journal
and
Reuters
reported that U.S. officials are set to
reveal guidelines for how banks can repay funds
from the Troubled Asset Relief Program, or TARP.
Several banks that are undergoing stress tests have said they quickly want to repay funds under the TARP program, in part to prove their financial health, but also to escape from tough rules governing executive pay, dividend payments and stock repurchases, according to the reports.
Capital One
(COF) - Get Capital One Financial Corporation Report
was among the companies benefiting from a Goldman Sachs upgrade of the debt rating for the U.S. banking sector to attractive from neutral.
Goldman upped its view on Bank of America's debt rating to outperform and cut its rating on Morgan Stanley to in-line from outperform. Capital One, though, surged 15% to close at $22.39 after Goldman boosted its debt rating to outperform.
