D&D Note (5-11-2012)
American bank JPMorgan (JPM) suffered a $2 billion trading loss, and the stock fell 9% on the day. CEO Jamie Dimon chalked the loss up to “bad judgement” and the trade was meant to be a hedge. Jamie Dimon also said they could suffer further losses.
And now the FED is seeking more information on the trade. Also rating agency Fitch cut the bank one level after the bell and may be cut further.
The markets did bounce back from early losses, after American consumer sentiment index for May did rise to 77.8 from 76.4 which helped fuel the post JPMorgan rally. But then Greece came out and said they are not close to forming a coalition government, which sent markets down for the rest of the day.
The DOW ended down 1.7%, the Nasdaq was down 0.7%, and the S&P 500 finished down 1.2%.
Chip maker Nividia (NVDA) rose 7% today off of better-than-expected quarterly results.
Oil and Gold both fell today as well. Oil down 95 cents to $96.13 a barrel, Gold was down $11.50 to end at $1,584 an ounce. Gold has simply broken the 3 year upward channel its been in and now the risk of further downside is just too large where as the potential near term upside is very uncertain.
The current JPMorgan news could wash over in a few weeks or we could see further problems in the large bank (“too big to fail”) sector which highlights why D&D prefers the regional banks.
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