U.S. stocks and exchange traded funds (ETFs) are trading in positive territory after one of the nation’s largest financial institutions is able to raise hoards of capital.
Reports indicate that Bank of America (BAC) rose nearly $13.47 billion through the sale of 1.25 billion shares of stock. This is in addition to the $7.3 billion raised from the sale of a business in Asia earlier this month. The financial giant is more than halfway toward raising the $33.9 billion in capital the government is requiring as result of its stress tests. This news sent financial stocks up in morning trading, the Financial Select SPDR (XLF) gained nearly 0.3% in intraday trading; BAC is 6.2%.
In an attempt to bring more transparency to the credit card world, the House is set to pass a bill, that the Senate already passed, that will ban arbitrary credit card rate hikes, states Anne Flaherty of the Associated Press.
This new law will make it easier for consumers to understand how credit card companies assign fees, alter interest rates and implement their method of billing. The bill also states that a consumer must be greater than 60 days late on a payment before seeing a rate increase on an existing balance, and even then, the lender will be required to the previous lower rate if the consumer pays the required minimum balance on time. This measure will most definitely help consumers during hard times.
On a different note, Treasury Secretary Timothy Geithner announced that a private-public program to aid banks is expected to begin in six weeks. The program is a partnership which will help banks shed their bad assets and will combine $100 billion in government funds with private investments hoping to build a pool of nearly $1 trillion. Additionally, Geithner states that preliminary approval will be sent to applicants over the next few weeks, report Rebecca Christie and Robert Schmidt of Bloomberg.
On a negative note, the U.S. dollar has fallen to its lowest level vs. the euro since January. As things start to normalize, the combination of falling currency and stock volatility spurred speculation that investors will will seek higher yielding assets. This sent the PowerShares DB U.S. Dollar Index Bearish (UDN) up nearly 1% in morning trading and is up about 0.1% for the year.
The Dow Jones Industrial Average and the Nasdaq added nearly 1%, whereas the S&P 500 added nearly 2% in morning trading.
Kevin Grewal contributed to this post.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.