Bank of America stock nearing $5 danger zone

November 30, 2011

By Maureen Farrell @CNNMoneyMarketsNovember 29, 2011: 6:40 PM ET

NEW YORK (CNNMoney) -- Another trading day and another low for Bank of America's

stock.

Shares of Bank of America (BAC, Fortune 500) dropped more than 3% Tuesday,

hitting a new 52-week low of $5.03 -- its lowest level since March 12, 2009.

After the close of trading Tuesday, Bank of America was one of 37 financial

institutions downgraded by S & P.

Beyond the S & P downgrade, trading could become even more complicated in Bank of

America's stock, if it falls below $5. Under that threshold, many broker-dealers

will not allow investors to buy or short a stock on margin, according to a

spokesperson for the New York Stock Exchange.

Buying on margin means that an investor can simply put down 50% of the price of

a stock initially, and the trading firm advances the rest.

It's been a tough year for the troubled bank, which has seen its share price

decline roughly 62% from the start of the year.

Among other challenges, Bank of America has struggled under mounting issues

related to its mortgage business.

The bank's rapidly declining share price is likely to increase pressure on the

bank to slim down and sell assets. Bank of America has already said it plans to

lay off 30,000 workers over the next several years.

Back in September, when that layoff announcement was made, investors worried

about Bank of America's stock falling below a psychologically jarring level of

$6. It dropped below that level on Oct. 3.

As Bank of America's shares are still relatively far from the stock's all-time

intraday low of $2.53 hit on Feb. 20, 2009.

A spokesperson for Bank of America said the bank does not comment on its share

price.

Despite a rally in the stock market Tuesday, shares of most other major banks

including Goldman Sachs (GS, Fortune 500), Stanley (MS, Fortune 500), and

JP Chase (JPM, Fortune 500) fell.

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