When the stock market is falling Bank of America shares are usually falling harder. That's true today as shares of the bank hit a 52-week low.
The nation's second largest bank touched $5 several times this afternoon before closing at $4.99--a level not seen since March 2009.
Bank of America was holding on to the $5 price by a thread as investors pushed the shares of the bank back and forth between $5.01 and $5 this afternoon.
Though the drop under $5 is significant because some mutual funds and pension funds will not hold stocks below $5 meaning there could be further sell-off of the stock.
The reasons for the drop are not unlike what investors have been seeing over the last six months including uncertainty in Europe's debt crisis, questions about bank capital requirements and concerns over legal battles and costs surrounding the bank's mortgage problems.
Brian Moynihan, BofA's CEO, said today that the problems with the European debt crisis will still be an issue in the new year. "Europe is going to affect us in this country, it continues to do so," he said at an economic outlook conference.
Moynihan added, "The risk is that an economy which in aggregate is as big as the U.S. is really having a recessionary environment and obviously holds down worldwide growth."
Indeed that sentiment is echoed by less than calming comments from European Central Bank president Mario Draghi. He said Europe's economic outlook was highly uncertain and added that substantial risks were still at play.
For BofA, issues about required capital levels are also at play. A report in the Wall Street Journal said today that The Federal Reserve is expected to embrace new global rules that requires big banks to hold extra capital. Under the new rules banks would have to hold 2.5% of extra capital in addition to the 7% base all institutions will be required to hold.
That news sent shares of all major U.S. banks down today with the KBW Bank Index down 2.7%. Shares of JPMorgan Chase were down 3.7% while rival Citi dropped 4.6% to $24.82. Morgan Stanley, whose shares have been sensitive to news out of Europe, sank 5.5% this afternoon to $14.16.
The Dow Jones Industrial Average meanwhile shed 100 points, or .8%, to close at 11,766. The S&P 500 index closed down about 1.2% as did the Nasdaq.