Thread: Bank of America stock surges nearly 11%

Bank of America stock surges nearly 11%

By Maureen FarrellAugust 24, 2011: 12:06 PM ET
NEW YORK (CNNMoney) -- Call it the Whitney effect.

Months after the one-time doomsayer on bank stocks sparked a mass exodus from the municipal bond market, Meredith Whitney told Bloomberg Radio Wednesday that there's no urgency for Bank of America to raise capital.

Her pronouncement sent shares of the battered bank soaring nearly 11% Wednesday. The gains spilled over to other banking stocks, with shares of Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Citigroup (C, Fortune 500) rising between 1.7% to 2.8%.

By midmorning, shares of Bank of America (BAC, Fortune 500) eased off earlier highs, trading up 8.49% to $6.82, marking the stock's first day in positive territory in weeks.

Bank of America's stock takes a beating

The stock has gotten hammered with shares down roughly 40% over the past month compared with a 15% drop in the S&P 500 (SPX).

Bank of America CEO Brian Moynihan and representatives for the company continue to tell the market that the bank has a comfortable cash cushion, yet the stock has persistently sold off on rumors to the contrary.

Meredith Whitney, founder of the eponymous Meredith Whitney Advisory Group, also told Bloomberg that Moynihan is "the right guy for the job."

Formerly a banking industry analyst with Oppenheimer funds, Whitney gained influence when she made several prescient claims about a coming collapse of banking stocks, particularly Citigroup, in 2007 ahead of the financial crisis.

Her prediction in late 2010 that the municipal bond market would see hundreds of billions of dollars in default were taken seriously by investors who quickly pulled money out of this market.

So far, there's been only a modest uptick in municipal bond defaults.

Whitney was unavailable for immediate comment.

Whitney's call on Bank of America comes as Raymond James analyst Anthony Polini reiterated his 'strong buy' rating on the Charlotte, N.C., bank, citing its "distressed valuation."

JPMorgan also upgraded Bank of America's stock Wednesday to 'neutral' from 'underweight.'

The zombie banks are back

In its report, JPMorgan, however, urged the bank's management to address concerns in the credit market and said that pressure on Bank of America's stock and bonds could actually "increase the chances of a credit-positive development, such as a capital raise."

Earlier this week, a Bank of America spokesperson told CNNMoney that it was not considering a capital raise at this time.

http://money.cnn.com/2011/08/24/markets ... h_whitney/

Bank of America Corp (NYSE:BAC)

Real-Time Quote 6.88

LOW 6.01 >>> 52-Week Range >>> HIGH 14.70

Year-to-Date -48.43%

http://money.cnn.com/quote/quote.html?symb=BAC

New-home sales fall, 2011 could be worst year yet


DEREK KRAVITZ AP Real Estate Writer | Posted: Tuesday,
August 23, 2011 1:45 pm

WASHINGTON (AP) — Sales of new homes fell for the third straight month in July, a sign that housing remains a drag on the economy. If the current pace continues, 2011 would be the worst year for new-home sales on records dating back at least half a century.

Sales fell nearly 1 percent in July to a seasonally adjusted annual rate of 298,000, the Commerce Department said Tuesday. That's less than half the 700,000 that economists say represent a healthy market.

Last year, 323,000 homes were sold — the worst year on records that go back to 1963.

While new homes represent less than one-fifth of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs and $90,000 in taxes, according to the National Association of Home Builders.

High unemployment, larger required down payments and tougher lending standards are preventing many people from buying homes.

Plunging stocks and a growing fear that the U.S. could tip back into another recession are also keeping people from entering the troubled housing market.

Renewed concerns about job security likely weighed on many would-be buyers' minds, said Mark Vitner, senior economist at Wells Fargo.

A slowdown in the U.S. economy has more than offset any boost from super-low mortgage rates, said Paul Dales, senior U.S. economist at Capital Economics.

"A new home is a luxury that many Americans can no longer afford," Dales said.

All home sales remain weak. The sales pace for previously occupied homes is trailing last year's 4.91 million sales, the fewest since 1997. In a healthy economy, people buy roughly 6 million existing homes annually.

A report last week showed that more home sales than usual fell apart at the last minute, a sign that many buyers may be nervous about the economy. At least 16 percent of deals were canceled head of closings last month — four times the rate in May.

The troubled housing industry is hurting the broader economy. After previous modern-day recessions, housing contributed up to 20 percent to U.S. economic growth. That has fallen to 4 percent following the Great Recession.

Sales rose in July for new homes valued at less than $150,000. They also increased for those going for more than $750,000. But mid-priced home sales fell.

Outside of luxury markets, builders are struggling to compete with foreclosures and short sales, which have forced down prices. A short sale is when a lender accepts less than what is owed on the mortgage.

Those homes are selling at an average discount of 20 percent, and they lower neighboring values. That's made many re-sales a bargain compared with new homes, creating an average 30 percent disparity in prices.

Sales of new homes doubled in the Northeast in July, but the region has the weakest sales in the country by far. In the South and West, sales fell 7.4 and 5.9 percent, respectively. Sales rose 2.4 percent in the Midwest.

The median price of a new home fell more than 6 percent to $222,000 nationally. But it is still roughly 27.5 percent higher than the median price of a re-sold home, which was $174,000 in July.

The number of new homes for sale at the end of the month dropped to a record low of 165,000, down 0.6 percent from June. At the July sales pace, it would take 6.6 months to exhaust the current supply. Economists consider a 6-month supply a normal level, indicating that builders are heavily cutting back construction.

Sales of new homes have fallen 18 percent in the two years since the Great Recession officially ended.

A telling sign of how bad things have gotten for the housing industry: Prices have dropped more since the recession started, on a percentage basis, than during the Great Depression of the 1930s.

And it took 19 years for prices to fully recover after the Depression.


http://www.nctimes.com/ap/business/arti ... z1VyNnRAOp

Stocks Gain for Third Day on Late Surge

By CHRISTINE HAUSER
Published: August 23, 2011

Financial stocks led the broader equities market on Wall Street higher on Wednesday, as investors weighed the latest data about the United States economy and their expectations for a gathering later this week of Federal Reserve officials.

With a late-day surge, the stock market climbed more than 1 percent after wavering between modest gains and losses during most of the day. It marked the third consecutive day that the major indexes have pushed ahead, as investors scooped up stocks that had become cheaper after recent sell-offs. Gold futures fell more than 5 percent, or by more than $100 an ounce, on the Comex in New York, and prices of the benchmark Treasury bond fell.

A government report Wednesday that showed that durable goods orders rose in July provided the market with little stability early in the day. Analysts noted that, considering recent talk of another recession, it would take more than one economic data point to convince investors that the economy was on solid footing.

“Any one report is not going to have real significant impact because the market is looking for a breadth of data,â€