JPMorgan’s surprise $2 billion trading loss prompted a sell-off in financial stocks Friday, with smaller declines across the broader market as investors decided this was more of a problem for investment banks than for other industries. JPMorgan’s surprise $2 billion
JPMorgan’s surprise $2 billion trading loss prompted a sell-off in financial stocks Friday, with smaller declines across the broader market as investors decided this was more of a problem for investment banks than for other industries.
Most of the 10 industries in the Standard & Poor’s 500 index were flat or posted modest declines; financial stocks fell 1.1 percent.
For that, the other investment banks could thank JPMorgan, America’s biggest bank. The stock plunged 9.3 percent, dragging other banks with big Wall Street operations down with it. Morgan Stanley fell 4.2 percent and Goldman Sachs fell 3.9 percent. Citigroup fell 4.2 percent.
Retail-focused banks fared better. Wells Fargo edged up 0.4 percent.
JPMorgan’s blunder comes in the midst of a political battle over how closely to regulate banks, though JP Morgan’s CEO Jamie Dimon said the trades would not have been affected by the so-called Volcker rule, expected to take effect this summer. Still, the $2 billion loss is sure to be used as ammunition by those pushing for tighter regulation of investment banks.
“It’ll definitely have a political impact,” said Randy Warren, chief investment officer for Warren Financial Service.
The Dow Jones industrial average fell 34.44 points to close at 12,920.60. It had waffled around with small gains and losses throughout most of the day before settling into the red in the afternoon.
The Standard & Poor’s 500 index fell 4.60 points to close at 1,353.39. The Nasdaq composite index, which is heavily weighted with technology stocks, was up 0.18 points to 2,933.82.
Microsoft and Intel both rose 1.4 percent after Intel told analysts it is on track to meet sales expectations. Tech investors were relieved to hear that one day after Cisco Systems prompted selling in tech shares by being pessimistic about sales. Semiconductor maker Nvidia jumped 6.4 percent after reporting revenue that was higher than analysts were expecting.
Some consumer discretionary stocks did well, with retailer Bed Bath & Beyond jumping 4.1 percent, one of the biggest gains in the S&P 500 index, and video streaming and DVD-by-mail company Netflix rose 6.9 percent.
Pharmacy benefits manger Express Scripts rose 1.4 percent after it reported prescription growth in its first quarter since splitting with drugstore chain Walgreen.
