November 30, 2011- The sliding of Bank of America’s stock value is becoming a common occurrence on Wall Street. On Tuesday, the bank’s shares dropped to $5.03 or about 3%. That value is the lowest the stock has been valued at in over two years. The last time the stock was this low was March of 2009 during the heart of the recession.
Standard & Poor’s downgraded the Bank of America along with another 36 financial institutes after trading closed on Tuesday. Equally worrisome with the S&P downgrade is trading of the bank’s stock could become quite complicated if it drops below $5.
If that happens a number of brokers and dealers will not permit investors to buy or short on margin that particular stock, said a source from the stock exchange. Buying on margin is when an investor only needs to put 50% down to purchase the stock. The trading company fronts the other 50% of the stock’s value to purchase it.
The bank has been troubled much of the year and its share value has dropped by almost 62% since the beginning of 2011. Among its problems is the bank’s struggle with its mortgage business, which has seen mounting complications of late.
The drop in share price will probably pressure the bank to sell assets and cut additional jobs. The bank has already announced it would be eliminating over 30,000 jobs in the next few years.