Stocks were looking to start the week in the green this morning as Wall Street awaits existing home sales data. We know that the red hot housing market has been cooling off, today we’ll get a clearer picture of exactly how much and where. Data is expected to show a small decrease to 5.82 million from 5.86 million existing home sales in June.
Later this week, investors will be looking for clues on the Fed’s taper timeline during the central bank’s Jackson Hole Symposium. Chairman Jerome Powell is expected to give a speech entitled “The Economic Outlook,” which “may suggest the speech could have a more near-term focus,” Nomura economist AichiAmemiya said in a note. The event will take place virtually on Thursday and Friday.
The inevitable tapering of the Fed’s $120 billion emergency bond-buying program is seen as progress to an eventual interest rate hike. Our trade alert for today highlights a stock from the financial sector that will likely benefit as the U.S. continues on the tapering path and rising rates grow nearer.
Bank of America Corporation (BAC) provides banking and financial products and services for individual consumers, institutional investors, large corporations, and governments worldwide. It operates through the following segments: consumer banking; global wealth & investment management; global banking; and global market segments.
Thanks to its global investment banking and financial services portfolio, most are familiar with this financial titan. In the U.S., BAC currently operates via 4,300 retail financial centers, 17,000 ATMs, and digitally serves 41 million active users. Furthermore, the company is also present in 34 other countries across the globe.
After more than doubling since its pandemic-era low, let’s take a look at the factors that could boost BAC going forward. For one thing, the Fed has signaled two interest rate hikes as soon as late 2023, which should help BAC increase its interest income down the road. Zooming in a little closer, according to Globe Newswire, the global financial services market is expected to grow at a 9.9% CAGR to hit $22.5 trillion this year.
Furthermore, BAC’s shift in focus towards the digital space seems to be benefiting the company. Earlier this month, BAC reported that its Bank of America app facilitates 85% of deposit transactions on its network now. In the second quarter, this accounts for nearly 48 million checks that BAC customers deposited.
If you need another reason, consider BAC’s uninterrupted 21-year history of rewarding investors through dividends. The company recently raised its quarterly dividend to $0.21 per share, up 16.7% from the previous quarter. New investors won’t be included in the September 24th payout. Even still, it’s worth mentioning because, with their impeccable history, BAC’s dividend is not likely going anywhere anytime soon. The Wall Street pros are mostly bullish on BAC. Of 29 analysts polled, 17 rate the stock a Buy, 9 rate it a Hold, and only 2 say to Sell BAC stock. A 12-month median price target of $44 represents a 10% increase from its current level.
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