A popular exchange traded fund tracking the U.S. financial sector rallied nearly 2% in premarket dealings Wednesday following news that Bank of America (NYSE: BAC) is in an $8.5 billion settlement related to toxic mortgages.
Bank of America shares jumped as much as 6% before the bell.
The banking giant on Wednesday morning said it has reached an agreement to repurchase mortgage-backed securities packaged by Countrywide Financial, which Bank of America purchased in the credit crisis.
Evercore Partners in a note said the deal should remove some of the overhang on Bank of America shares. The stock was down nearly 20% year to date as of Tuesday’s close.