This Is Good News for Bank of America Stock

The Federal Reserve raised interest rates on Wednesday, a move that will bolster the bottom lines of banks. Yet, bank stocks nevertheless dropped in the wake of the news, with Bank of America (NYSE: BAC) off by 1.6%.

The Fed's decision to raise the benchmark fed funds rate, the rate banks charge to lend each other excess cash, marked the third time this year that it had done so. The target fed funds rate is now between 1.25% and 1.5%.

"Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate," noted a press release announcing the interest rate hike. The release continued: "Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters."

Source: Fool.com