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MarketScreener Homepage  >  Equities  >  Nyse  >  Bank of America    BAC

BANK OF AMERICA

(BAC)
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Embattled Bank Stocks Lose Billions

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08/14/2019 | 02:23pm EDT

By Michael Wursthorn

Investors continued their run on bank stocks, sending shares of some of America's biggest financial institutions sharply lower following the latest sign of trouble ahead for the U.S. economy.

A brief inversion of 10- and two-year U.S. Treasurys early Wednesday sent shock waves through the stock market. Banks were among the hardest hit, as investors worried whether the inversion suggests a recession is likely.

Shares of JPMorgan Chase & Co., Morgan Stanley, Citigroup Inc., Wells Fargo & Co., Bank of America Corp. and Goldman Sachs Group Inc. all slid at least 4% Wednesday, outpacing the broad S&P 500's 2.7% decline in recent trading. Including Wednesday's losses, those six banks have lost roughly $132 billion in market-cap value since the end of July.

Wednesday's move in bond yields raised alarms among investors that the U.S. economy, which has been solid most of the year, is faltering. A strong consumer, a robust labor market and low inflation have underpinned the latest stretch of the economic expansion, even as manufacturing activity and other goods producers struggled.

Now, there are concerns that leg of support for the economy, and the stock market, is on the verge of potentially floundering. The inversion of 10- and two-year U.S. Treasurys has been a reliable indicator of an eventual recession for the past 40 years, and analysts say investors are increasingly factoring in the likelihood banks will struggle in that kind of environment.

"It's a slide into something no one wants to see," said Mark Lindbloom, a portfolio manager at Western Asset Management Co., of the inversion. "The sentiment shifts among consumers are now the unknown. Potentially a change there is how you could see a more significant slowdown."

For banks, the move down in yields lowers interest rates, compressing how much they can earn off of lending. Even worse, a broader economic slowdown would likely stifle lending activity, as well as other bank services, further hitting their profits.

Investors aren't taking any chances, pushing shares of most banks and financial institutions lower on Wednesday, so much so that four of those six major banks are trading below their book value. In other words, shares are now trading at a price that doesn't fully reflect the assets on those banks' balance sheets.

Bank of America, Goldman Sachs, Morgan Stanley and Citigroup all traded below their forward-looking book values. Prior to this month, only Citigroup had that distinction. Wells Fargo and JPMorgan shares remain above their book values. But that could change if shares remain under pressure this month.

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA -2.00% 26.64 Delayed Quote.9.29%
CITIGROUP INC. -2.27% 62.46 Delayed Quote.22.76%
DJ INDUSTRIAL -1.95% 25741.62 Delayed Quote.12.54%
GOLDMAN SACHS GROUP INC -2.59% 197.18 Delayed Quote.21.17%
JP MORGAN CHASE & COMPANY -2.16% 106.37 Delayed Quote.11.37%
MORGAN STANLEY -1.74% 39.57 Delayed Quote.1.56%
NASDAQ 100 -2.82% 7489.437077 Delayed Quote.21.08%
NASDAQ COMP. -2.63% 7780.867054 Delayed Quote.19.79%
S&P 500 -2.10% 2861.5 Delayed Quote.16.66%
WELLS FARGO & COMPANY -1.89% 44.765 Delayed Quote.-1.00%
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Financials (USD)
Sales 2019 91 832 M
EBIT 2019 38 496 M
Net income 2019 26 736 M
Debt 2019 -
Yield 2019 2,44%
P/E ratio 2019 9,57x
P/E ratio 2020 8,87x
Capi. / Sales2019 2,76x
Capi. / Sales2020 2,74x
Capitalization 253 B
Chart BANK OF AMERICA
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Technical analysis trends BANK OF AMERICA
Short TermMid-TermLong Term
TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 29
Average target price 32,95  $
Last Close Price 27,19  $
Spread / Highest target 61,8%
Spread / Average Target 21,2%
Spread / Lowest Target 2,98%
EPS Revisions
Managers
NameTitle
Brian T. Moynihan Chairman, President & Chief Executive Officer
Catherine P. Bessant President-Global Product Solutions & CMO
Thomas Kell Montag Co-Chief Operating Officer
Paul M. Donofrio Chief Financial Officer
Thomas J. May Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
BANK OF AMERICA9.29%253 093
JP MORGAN CHASE & COMPANY11.37%347 579
INDUSTRIAL AND COMMERCIAL BANK OF CHINA1.89%259 736
WELLS FARGO & COMPANY-1.00%201 007
CHINA CONSTRUCTION BANK CORPORATION9.11%186 661
HSBC HOLDINGS PLC-8.22%146 610