Stocks were flat to start the morning after yesterday’s Fed-induced sell-off that led to the first losing session of 2022. Concerns over tighter monetary policy seem to be weighing heavy on investor sentiment a day after minutes from the December Federal Reserve meeting revealed plans to taper economic help at a faster pace than anticipated.
Wall Street strategists expect a bumpy road ahead for stocks as the Fed begins to tighten its policy. The median year-end target for the S&P 500 stands at 5,050, representing a gain of only 7% from yesterday’s close.
Today we’ll discuss a stock that will likely do well as Fed policy changes come to fruition in 2022.
Bank of America Corporation (BAC) provides banking and financial products and services for individual consumers, institutional investors, large corporations, and governments worldwide. It operates through the following segments: consumer banking; global wealth & investment management; global banking; and international market segments.
Thanks to its global investment banking and financial services portfolio, most are familiar with this financial titan. In the U.S., BAC currently operates via 4,300 retail financial centers, 17,000 ATMs, and digitally serves 41 million active users. Furthermore, the company is also present in 34 other countries across the globe.
After more than doubling since its pandemic-era low, let’s take a look at the factors that could boost BAC going forward. For one thing, the Fed has signaled two interest rate hikes, and they could both come next year, which should help BAC increase its interest income down the road. Zooming in a little closer, according to Globe Newswire, the global financial services market is expected to grow at a 9.9% CAGR to hit $22.5 trillion this year.
Furthermore, BAC’s shift in focus towards the digital space seems to be benefiting the company. Earlier this month, BAC reported that its Bank of America app facilitates 85% of deposit transactions on its network now. This accounts for nearly 48 million checks that BAC customers deposited in the second quarter.
Jim Cramer recently cited Bank of America as one of the potential beneficiaries of rising rates. He thinks that BAC will “make a killing if the Federal Reserve is forced to tighten.”Consider BAC’s uninterrupted 21-year history of rewarding investors through dividends if you need another reason. The company recently raised its quarterly dividend to $0.21 per share, up 16.7% from the previous quarter.
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Before you consider buying Bank of America, you'll want to see this.
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