Yesterday was a wild day on the stock market. It isn’t enough that Greece might go into default even with the recent assistance, now there is the “Occupy Wall Street” movement beginning to gain momentum. Adding fuel to the fires of frustration was Bank of America’s announcement that it would add a $5.00 monthly fee to accounts of debit card holders. This one even caught the attention of President Obama.
The Athens stock exchange appears to have been the worst hit yesterday with a 7.03% slide. The US DJIA took a much lower 1.57% slide. And yet there are some stocks that are taking some very wild rides.
Bank of America (NYSE:BAC) The financial sector was hit pretty hard, nearly a 10% hit across the board. What happens in one day to cause the financial industry to take a 10% hit in 24 hours? Was it “Occupy Wall Street”?, The president blasting Bank of America or was it just due time? What do you think of the fees to access your own money? You already pay a debit card charge don’t you?
Wells Fargo (NYSE:WFC) Late last month the Wall St. Cheat Sheet wrote an article about Citi, BofA and Wells getting “drop kicked by Moody’s”. That led to a 4% hit in the stock price. Was Moody’s right that the banks aren’t quite up to snuff? One source reported that federal regulators bent rules allowing some banks like Wells to pay back loans early in order to prevent a requirement to bolster the balance sheets even further.
AMR Corporation (NYSE:AMR) Then another big swing we have been watching was AMR. AMR took nearly a 30% hit yesterday and is out of the chutes running this morning. One has to wonder what happened that AMR might make such a sudden recover? The bankruptcy rumors and early pilot exits didn’t go away so what is it?
Is it possible that the market picked $2.00 as the over under for American? At $2.00 the total capitalization is very low, almost takeover target range. Maybe some investors are hedging a takeover bet. With Airlines book values are very hard to determine. Many older aircraft may be completely off the books as depreciated assets and the new move to leasing blurs the picture even more. At $2.00 a share the line is pretty good though.
With AMR in the $2.00 per share range there is really one question. If the company files for chapter 11 protection, will they issue new stock and make the current stock worthless? Or will they maintain the current stock making this a buy opportunity. Any one else have a thought on the over/under for AMR?