Bank of America (BAC) shares moved higher in early trading Friday, gaining 0.7% to $55.56 and outperforming the S&P 500. The stock opened at $55.60 and traded between $55.14 and $55.79 during the session. The broader financial sector also saw gains, with the Financial Select Sector SPDR Fund (XLF) rising about 0.7% and the Invesco KBW Bank ETF (KBWB) climbing roughly 1.1%. The SPDR S&P 500 ETF (SPY) was slightly lower, down about 0.2%.
Investor attention is now focused on two key upcoming events: the Federal Reserve's annual bank stress-test results, scheduled for release on June 24 at 4 p.m. EDT, and Bank of America's second-quarter earnings report, due before the market opens on July 14. The stress tests assess whether the 32 largest U.S. banks have sufficient capital to continue lending under severe economic scenarios, including sharp downturns in commercial and residential real estate and corporate debt markets. However, the Fed has indicated that the results will not alter current capital requirements, as existing stress capital buffer rules remain in effect through 2027.
On Thursday, Bank of America announced that its board had approved regular cash dividends on several series of preferred stock, with payments scheduled for July and August. While this is a routine move and does not signal any change to common stock dividends, it keeps the focus on the bank's capital levels and its capacity for future shareholder payouts.
The bank's trading and investment banking performance remains a key area of interest. Reuters reported that Co-President Jim DeMare told a Morgan Stanley conference that Bank of America might exceed its earlier guidance of 15% growth in second-quarter markets revenue, with equities leading the way. “While credit spreads and the like have remained firm, a lot more of the activity and revenues have been coming from the equity business,” DeMare said. Markets revenue, which comes from institutional client trading in equities, bonds, currencies, and commodities, tends to boost earnings when client volumes are strong.
Bank of America enters the earnings season with solid fundamentals. In the first quarter, the bank reported revenue net of interest expense of $30.3 billion, net income of $8.6 billion, and diluted EPS of $1.11, which topped analyst forecasts. Net interest income rose 9% to $15.7 billion, driven by higher-yielding assets. Investors will be watching closely to see if that trend continues in the second quarter.
However, regulatory risks remain a concern. Reuters reported Wednesday that the U.S. Justice Department issued subpoenas to several large banks, including JPMorgan Chase and Bank of America, regarding so-called “debanking” practices—the shutting down or limiting of customer accounts. Bank of America and Wells Fargo declined to comment. Regulatory headlines can weigh on bank stocks, as legal costs, new rules, or reputational damage may emerge before any formal resolution.
From a valuation perspective, Bank of America shares are trading at about 13.8 times earnings, with a dividend yield of 2.01%. The stock's 52-week range is $43.66 to $57.55. Analyst consensus, based on 17 tracked ratings, includes 14 buys, three holds, and no sells, with an average 12-month price target of $61.32—roughly 10% above the current price. This suggests the stock is fairly valued with modest upside potential, but could face headwinds from regulatory scrutiny, credit cycle concerns, or slower deal activity.
