Financial exchange traded funds trailed the overall market early Tuesday but made up ground following news of a major step forward in negotiations over the U.S. debt ceiling.
A 5% rally in Wells Fargo (NYSE: WFC) shares after strong earnings helped offset disappointing results from Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS).
Stocks jumped Tuesday afternoon on headlines President Barack Obama supports a plan that would reduce the deficit by nearly $4 trillion. [Debt Plan Hopes]
However, Bank of America and Goldman Sachs shares fell to new 52-week lows after lackluster earnings reports.
Bank of America lost nearly $9 billion, or 90 cents a share, in the second quarter after it booked a huge mortgage-related settlement. The stock recently fell below $10 a share.
Last month, the banking giant reached an $8.5 billion settlement in which it agreed to repurchase mortgage-backed securities packaged by Countrywide Financial, which Bank of America bought in the credit meltdown. [Mortgage Settlement]
Excluding items, Bank of America earned 33 cents a share in the latest quarter, which included $2.4 billion of reserve release.
The company doesn’t need to raise capital, CEO Brian Moynihan said Tuesday, according to WSJ Deal Journal.
Bank of America shares slipped 1.3%, while Financial Select Sector SPDR Fund (NYSEArca: XLF) rose 1.3%