U.S. Financial Stocks entered the spotlight today, climbing higher after consecutive losses. Significantly beneath value or in some cases at record lows, some investors believe bank stocks have no place to go but up. The financial sector is reflecting shifting attitudes with big banks pushing higher despite mixed news.
Shares of American International Group Inc. (AIG) are pushing higher after the news that both Deutsche Bank and AIG initiated coverage with a buy rating. The two banks issued the rating one day after Goldman Sachs presented the bank with a neutral rating.
Shares of Bank of America (BAC) are also pushing higher today after a rough year. News surrounding Bank of America does not seem to be in line with buying; however, the attitude shift surrounding the financial sector appears to be enough to buoy shares. BOA was included among three banks who have failed to live up to the new performance guidelines of the Obama administration’s foreclosure relief program. From this point forward, Bank of America will be excluded from financial incentives until they are able to conform to the Federal demands.
Additionally, a bill to postpone the implementation of new limits on the fees banks can charge merchants on debit card transactions failed yesterday. Banks will have to lower the transactions charges by next month, a move that would threaten a significant percentage of net income. Bank of America in particular has a lot to lose, with $1billion, or 13 percent of their net-income vulnerable.
JP Morgan Chase (JPM) is also at risk, with $1.1 billion or 5 percent of their venue exposed to the new confines according to RBC Capital Markets. The charges will be sliced to 12 cents from the current average of 44 cents. J.P. Morgan was also included among the banks who fell short of government performance requirements for foreclosure relief. Like Bank of America, shares of JP Morgan are headed higher.
Wells Fargo (WFC) was the third company considered in need of “substantial improvement” under the Home Affordable Modification plan. Warren Buffett’s decision to expand his position in the bank though, may be responsible for a stock trajectory that seems to out of sync with recent news. A holdings report on March 31 for Berkshire Hathaway, Buffet’s investment group saw their position rise to 359 million shares from 342 million shares the previous quarter. Buffet’s buying, given his status as a market oracle, can sometimes tip the scale when an investor is on the fence about a buy.
Morgan Stanley (MS) has also been ascending in spite of worrisome press. The government’s Pension Benefit Guaranty Corp. are looking to collect $25 million from the Morgan Stanley for precarious investment decisions made on behalf of New York’s Saint Vincent Catholic Medical Centers’ pension plan and those involved. Parts of the intention plan were invested in mortgage-backed securities, a financial instrument that the government believes was excessively risky.
Investment bank Goldman Sachs (GS) is also under fire, seemingly the norm of the financial goliath. The firm is subject to regulatory investigation for involvement with Libya’s sovereign-wealth fund according to Wall Street Journal reports. Among the elements being examined is a $50 million fee Goldman consented to pay the Libyan fund to help recover losses. This was prior to the unrest in Libya and the transaction was never completed. Shares of Goldman climbed.