Citigroup, JPMorgan shares jump as banks gain confidence

NEW YORK -- Bank stocks came surging back from the brink Wednesday as several top financial companies took various steps to restore confidence.

At Bank of America, CEO Kenneth Lewis bought 200,000 shares on Tuesday at prices ranging from $5.98 to $6.06, according to a Securities and Exchange Commission filing. Other board members also jumped in — Temple Sloan, lead director of the Charlotte bank, bought 41,800 shares, while another director, Robert Tillman, bought 200,000 shares. Directors Jacquelyn Ward, John Collins and William Barnet III also picked up shares. BofA shares climbed 31% to $6.68.

It was welcome relief for investors shocked Friday when BofA took $20 billion from the government to help absorb brokerage Merrill Lynch, which it had agreed to buy in October. It reported that Merrill had a record loss in the fourth quarter of $15.3 billion. BofA along with Merrill had already taken $25 billion from the government bailout fund. Tuesday, its shares hit an 18-year low as they plummeted 29% to $5.10.

Adding to angst from the BofA news, normally staid investment management firm State Street stunned investors Friday when it announced $5.5 billion of unrealized after-tax losses on its investment portfolio. And Citigroup reported $8.3 billion in fourth-quarter losses. "These results are forcing people to realize that we're not out of the woods," says Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel.

But Wednesday, instead of massive losses, investors heard about stock purchases by executives and leadership changes.

JPMorgan Chase CEO Jamie Dimon also entered the market, spending $11.5 million to purchase 500,000 shares on Jan. 16 for $22.93 each, according to an SEC filing. Wednesday, its shares soared 25% to $22.63.