Bank of America shares jump
The Bank of America Corp. roller coaster has reversed course again, with its stock rising 11% and a host of analysts saying capital fears are overblown.
The shares, which fell to a 21/2-year low of $6.30 on Tuesday, jumped as high as $7.05 on Wednesday before backing off a bit. They closed up 69 cents, or 11%, at $6.99.
Hammered by short sellers, who make money when stocks go down, Bank of America’s stock took its latest blow this week when a blog post said the bank might need $100 billion to $200 billion in new capital.
The bank issued a point-by-point rebuttal, saying blogger Henry Blodget had gotten his facts entirely wrong. Many observers agreed, with RBC Capital Markets analyst Joe Morford saying the stock price “has been detached from the fundamentals” and is now trading on rumors.
Independent bank analyst Meredith Whitney helped touch off the rally in the bank’s shares Wednesday morning by telling Bloomberg radio that the bank has no urgent need to raise capital and that Chief Executive Brian Moynihan is “the right guy for the job.”
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