Bank of America Reaps the Benefits of a Day Off

Everyone needs a day off once in a while, and the Independence Day holiday yesterday may have given bank investors the little bit of relaxation they needed to end the week on a high note. Bank of America (NYSE: BAC  ) is certainly enjoying the good vibes this morning as it holds a 1.09% gain as of 11:10 a.m. EDT.

Mr. Market
This morning's Employment Situation report has sent a positive rush through the market. More than 200,000 new jobs were added in June by the private sector, marking the economy's 40th consecutive month of job additions. And while this is good news that may have caused concern about the Fed's start to stimulus tapering, the report also noted that the current unemployment rate remained steady at 7.6%, maintaining the current level above the Fed's 6.5% target.

News from across the pond also helped the U.S. markets, with two European central banks stating that interest rates will remain low for the time being. The "forward guidance" from both the European Central Bank and the Bank of England were unexpected, but very much appreciated by the European markets.

Financials
Back here in the U.S., financial firms are leading the winners this morning despite the recent news of higher capital requirements from the Fed. Based on their most recent measurement, Bank of America and Citigroup (NYSE: C  )  have already satisfied the established guidelines for the Basel III requirements, which may make reaching the new Fed levels easier. While the implementation date in early 2014 for large banks will likely help some of the laggards, the added capital reserves will still put pressure on the banks' ability to lend and generate revenue.

But the big focus remains on the banks' abilities to capture the new home buyers entering the market as the housing recovery continues its steady gains. With inventory of homes falling, new construction is on the rise and home prices are moving higher. As mortgage-origination king Wells Fargo (NYSE: WFC  ) noted earlier, the drop in refinancing activity due to higher interest rates will have a temporary impact on revenue, but new mortgage origination may be able to eventually offset those losses.

Though B of A has been in the spotlight lately for some poor customer relations in its mortgage operations, the bank is still focused on gaining traction in the market and grabbing more of the new business. Long-term investors will have to keep an eye out to see if it can accomplish its goals while battling such a bad reputation.

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