Bank of America: a billion share day, major S&P 500 rebalancing at the close today.
Aside from nonfarm payrolls, the biggest story of the day is B of A's successful secondary.
Recall that they sold 1.3 billion common equivalent securities at $15.
Don't be impressed by the term "common equivalent." It's going to convert to common shares. S&P considers this issuance to be equivalent to a secondary equity offering.
The weighting of Bank of America in the S&P 500 will be increased at the close.
Indexers tied directly or indirectly to the S&P 500 control about 11 percent of the market, so do the math: 1.286 billion shares x 11% = about 141 million shares. That's how much will need to be bought at the close.
At the same time, indexers will need to SELL the other 499 stocks in the S&P 500.
Does this mean B of A will go up and the market will go down at the close. Not necessarily. This is well-telegraphed, there will be lots of sellers sitting around with tidy profits looking to offload their shares.
B of A has already traded 510 million shares before noon ET; we will likely do north of 1 billion shares today.
How remarkable is this? At 11:20 AM, total volume on the NYSE floor is 484 million shares, but B of A has traded 510 million—by itself.
That’s right—more volume in B of A alone than the whole floor.
Only 67 million shares of that 510 million have traded on the floor, the rest traded on Archipelago or elsewhere.
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