Top News on Wednesday that You Might Have Missed
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With a strong start to the earnings season, Boeing dominating the headlines, global markets rallying higher on Wednesday, there might be some news that you missed. These were important headlines that could affect your investment decisions, or influence your outlook for a potential stock/industry. Therefore, let’s take a look at a few of the top stories of the day, both company and market related.
Bank of America (NYSE: BAC) Sinks!
Bank of America has led a market leading industry in performance over the last year, as investors play catch up from the mass selling that took place in 2011. However, on Wednesday the stock declined over 4% after receiving its first downgrade since last April, by Credit Suisse. The reason this downgrade is significant is because (A) it was the first in over 9 months and (B) because it pushed the entire industry lower. Therefore, if you’re looking at the banks on Wednesday and trying to determine why the industry is lower, blame BofA.
More Banks Forced to Pay Up
Bank of America dominated the headlines on Wednesday due to the stock’s downgrade. However, this opinion was small compared to the news of a $1.5 billion deal with regulators. Supposedly, Goldman Sachs, Morgan Stanley, HSBC, and Ally Financial agreed on terms with regulators regarding allegations of foreclosure abuse. The deal will cost these banks a combined $1.5 billion and will end a long and drawn out review of individual responsibilities.
This news removes a significant risk that was hanging over the heads of these banks. Furthermore it adds to the $8.5 billion settlement that was announced for a number of other banks including Bank of America and Citigroup a few days prior. This $10 billion suit is a massive loss for the banks but a big win for consumers, as it will be given to those who have both lost their homes and those who are in danger of losing their home.
Facebook (NASDAQ: FB) Crosses $30, its Highest Level Since Summer!
There was no news regarding Facebook on Wednesday or any reason that it would rally by more than 4%; however the stock rallied anyway and crossed $30 for the first time since the summer months. There are many who believe that the company will present a smartphone during its Jan. 15 event.
At this point, the performance looks to be a combination of short covering and a re-emergence of its advertising business that’s pushing the stock higher. And although I am not trying to state my case for or against Facebook as an investment, I will say it now trades with a price/sales of 13.58, which is very close to that of Linkedin. I’d be careful at these levels, despite the fact that Facebook may very well rally higher following the crucial level being crossed.
The Sprint/Clearwire and Now Dish (NASDAQ: DISH) Saga Continues
After countless protests and potential problems with the acquisition of Clearwire (NASDAQ: CLWR) by Sprint, combined with rumors that Dish was trying to break up the acquisition to partner with Sprint, Dish threw another curve ball on Wednesday. Almost everyone, including myself, has believed that Dish’s protest to the FCC was because it wanted to partner with Sprint, now that its spectrum had been approved for 4G. However, Dish actually made a bid for Clearwire, an offer that makes no sense.
The speculation is now running wild, as people are trying to figure out its meaning. Personally, I have covered this story very closely and I think the offer is an attempt to break up the potential deal of Sprint/Clearwire, but at this point no one knows. Back when the Clearwire/Sprint deal was announced, I said that it would be a tough buy, and it’s looking as though the road to acquire Clearwire will be even more difficult than I expected.
Most likely, you were aware of one or more of these headlines prior to this article, but maybe not all. Each has deep meaning and could result in additional gains/losses for the stocks involved. Therefore, I suggest paying close attention to the stories above, and watch for any potential opportunities that could lead to additional gains in your portfolio.
BrianNichols has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Bank of America and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!