BAC – Daily Chart
The price of BAC shares rallied through resistance at $40.97 and there is resistance ahead at the $44.42 level.
Bank of America has been in focus after a large dump of shares by Warren Buffett’s Berkshire Hathaway company. The “Oracle of Omaha” took his holdings below the key 10% level where it would be possible to exit the whole stake without drawing attention.
Investors will look at Tuesday’s earnings to see if Buffett was right or wrong about dumping his stake in the company, which he invested in during the financial crisis as he believed in the company’s turnaround potential.
Buffett still owns a stake near 10% in the company and it is possible that he sees it as a chance to scale back the exposure. Bank shares boosted US stocks on Friday
Investors were expecting to see a slowdown in bank earnings with the Net Interest Income (NII) set to drop with the Federal Reserve’s interest rate cuts. The NII is the difference that the banks make on interest versus what they pay out to depositors. The hike in interest rates by the US central bank helped to fuel strong quarters for the big banks.
JP Morgan’s earnings on Friday were boosted by European growth and deals. However, the company’s CEO is still concerned about geopolitics.
Jamie Dimon said: “We still do not know the longer-term consequences of quantitative tightening, which reduces liquidity in the system at a time when market-making capabilities are increasingly limited by regulations. Furthermore, the war in Ukraine, compounded by last week’s attacks on Israel, may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships”.
Bank of America has been boosted by strength in the sector and will have to deliver its own strong results to keep the rally going.