Friday, October 22 2021

Shares of Bank of America Corporation (NYSE: BAC) rose on Friday despite the fact that the Nonfarm Payrolls report showed that the United States had created only 194,000 jobs in September. This is the second disappointing monthly increase in a row after the country created just 235,000 jobs in August and missed economists’ estimate of 750,000.

Disappointed employment report

Bank of America shares continue to trade near their recent highs after the United States released the Nonfarm Payrolls report on Friday, which showed the country created just 194,000 jobs in September. The jobs report missed economists’ estimate of 500K in September and raised questions about the pace of the economic recovery.

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The good news is that the unemployment rate has fallen to 4.8% from 5.1%, and according to Jim O’Sullivan, the chief US macro strategist at TD Securities, the pace of the recovery is likely enough for the Fed officials are following through on plans to gradually announce at the November FOMC meeting.

The US Federal Reserve could start cutting back on its monthly bond purchases, and while monetary tightening is generally seen as a drag on stocks, some investors see the Fed’s stance as a vote of confidence for the US economy.

A hawkish turn should have a positive influence on the US dollar and Treasury yields, while bank stocks should continue to be supportive. Bank of America has proven its stability, and CEO Brian Moynihan said consumer spending has exceeded pre-pandemic levels, deposit growth remains strong, and lending levels have started to rise.

Bank of America is currently trading at a forward P / E ratio of 13.78, the book value per share is around $ 29 and with a market cap of $ 372 billion, this bank’s shares are reasonably priced. Despite this, Wolfe Research analyst Steven Chubak downgraded Bank of America shares. Steven Chubak said:

For valuation, even when layered on higher rates (+100 basis points), stocks are rich in screen compared to other rate-sensitive peers including Morgan Stanley, Raymond James Financial, LPL Financial and Northern Trust.

Bulls control the price

Bank of America shares are up on Friday after the disappointing US jobs report, and if the price breaks above $ 47.5, the next target could be around $ 50 resistance. Shares of Bank of America continue to trade in a bull market and October 2021 is expected to continue to be a positive month for investors in that bank.

Data source: tradingview.com

On the other hand, if the price falls below the $ 40 support level, it would be a firm “sell” signal and possibly a trend reversal sign.

Summary

Bank of America shares continue to trade near recent highs after the United States released the Nonfarm Payrolls report on Friday, which showed the country created just 194,000 jobs in September. Wolfe Research analyst Steven Chubak has downgraded Bank of America shares, but with a market cap of $ 372 billion, that bank’s shares are reasonably priced.

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