Following the past two days of declines, the Dow Jones Industrial Average was back in positive territory for a brief time this morning. And while impatient investors might have asked why the index hadn't regained more of its losses yet, the news that it was out of the red might have been enough for others. But the fickle market has now sent the index back into the red, as it sits down 50 points at 11:45 a.m. EDT. And while the day is not over yet, one particularly infrequent event may have the index down and out before the closing bell.
Summer Solstice and the witching hour
So not only is today the longest day of the year for the Northern Hemisphere, but it is also a day of "quadruple witching," during which four types of investment contracts are set to expire -- stock index futures, stock index options, stock options, and single stock futures. This event only happens four times a year, and the expiration may inspire traders and investors to close out their positions. With the recent news from the Fed, Wall Street may be especially jittery, possibly leading to extreme volatility in the market later in the day.
For long-term investors, don't let the witching hour cast a spell of doubt on you -- it will pass, and if you're confident in your investments there's no need to fear technical trading events.
Long day for B of A
Bank of America is leading the Dow lower this morning following some very disappointing news for its investors. A new investigation has unveiled some more deception tactics from the bank, but this time it's with its mortgage bond holders. The investigation alleges that B of A and Ocwen Financial as mortgage servicers misrepresented the status of homes to mortgage bond trustees, including Wells Fargo and Bank of New York Mellon . While it was continuing to collect fees by stating the homes were still in the process of foreclosure, the homes had in fact been sold or paid off.
These new allegations come on the heels of testimony from former B of A employees, who described incentives for stalling otherwise qualified homeowners from proceeding through the loan modification process.
For Bank of America, these latest allegations may prove a deadly blow to its stated goal of capturing a bigger slice of the new mortgage business market. Though the company already had a tarnished reputation from its Countrywide legacy, it now has to deal with both customer and investor wariness. The bank will need to prove to new customers that it has cleaned up its loan processing department and prove to new business partners in the MBS market that it won't misrepresent the loans bundled in its securities. Both could prove a herculean task.
These two mortgage-related scandals could generate more uncertainty in the bank's place as an investment. New lawsuits may be forthcoming, and who knows when the next headline may emerge with further allegations of misconduct.
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The article Will Superstition Take Hold Of the Dow? originally appeared on Fool.com.Fool contributor Jessica Alling has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.