Markets experienced another gloomy day on Friday as JPMorgan
Chase disclosed it had suffered a $2 billion trading loss in a span
of only six weeks. The financials bore the brunt and dragged the
benchmarks along, also ensuring weekly losses for them. Separately,
a couple of good economic reports could hardly make any impact
against the strong headwinds of the day.
The Dow Jones Industrial Average (DJI) closed 0.3% lower at
12,820.60. The Standard & Poor 500 (S&P 500) also dropped
0.3% to end Friday's trading session at 1,353.39. The tech-laden
Nasdaq Composite Index was helped by some good news from the tech
sector, and it moved up 0.01% to end at 2,933.82. The fear-gauge
CBOE Volatility Index (VIX) gained 5.6% and settled at 19.89. The
advancers were outshined by the declining stocks on the New York
Stock Exchange; as for 39% of advancers, 58% stocks moved down. The
remaining 3% stocks were left unchanged. Total volumes on the NYSE
were at 3.87 billion shares.
Late Thursday financial bellwether JPMorgan Chase & Co.
) disclosed that the bank has suffered pre-tax trading losses worth
$2 billion. This loss was due to synthetic credit positions or the
over-the-counter derivatives, which however was offset by
credit-related position sales of $1 billion. Nonetheless, the
company suffered a humongous loss and stated that it expects to
incur an after-tax loss of $800 million in the corporate segment
during the next quarter.
Following this development, investors were wary of the stock on
Friday and it received a heavy battering. JPMorgan' stocks plunged
9.3% on Friday. The broader financial sector was also not spared
and the Financial Select Sector SPDR (XLF) and the KBW Bank Index
(BKX) suffering a downtrend of 1.1% and 1.2%, respectively. Among
other financial stocks, Citigroup, Inc. (NYSE:
), The Goldman Sachs Group, Inc. (NYSE:
), Morgan Stanley (NYSE:
), and Barclays PLC (NYSE:
) plunged 4.2%, 3.9%, 4.2% and 4.3%, respectively.
Coming to technology stocks, some good news helped the
Technology Select Sector SPDR (XLK) chalk up gains of 0.1%. Intel
) came out with an announcement that it is well en route to meet
its sales expectations. This gave a huge boost to investors in the
tech sphere. Intel shares rose 1.4%, joined by Microsoft
) that also gained 1.4%. NVIDIA Corporation (NASDAQ:
) also lent significant support to the technology arena, as its
shares jumped 6.4% after it topped revenue estimates. Other stocks
like SanDisk Corp. (NASDAQ:
), Broadcom Corp. (NASDAQ:
) and Marvell Technology Group Ltd. (NASDAQ:
) gained 0.3%, 1.3% and 1.8%, respectively.
Economic data too was on the positive side, but not strong
enough to prevent the markets from closing in the red. The U.S.
Bureau of Labor Statistics reported that the Producer Price Index
(PPI) for finished goods eased 0.2% in April, and this fall was in
line with consensus estimates. This was the first decline since
December last year and the biggest since 0.3% fall in October.
Starting January, the PPI index had trended higher with January and
February registering gains of 0.2% and 0.45, respectively. The
index remained flat in March. Separately, The Thomson
Reuters/University of Michigan consumer sentiment's preliminary
index moved up from 76.4 to 77.8, the highest level since January
However, these reports did the markets little good. Technology
shares helped Nasdaq end in the green with negligible gains.
However, the Nasdaq had to join the other benchmarks in negative
territory for the week. The changing political scenario in Europe
had left investors wondering worried about the region's fiscal
health, dragging down US benchmarks. Greece continued to struggle
to form a government increasing its chances of exiting the euro.
Eventually, the benchmarks had a rough run through the week. In
what was one of the Dow's worst weekly performances this year, it
ended 1.7% lower, while the S&P 500 and the Nasdaq dropped 1.2%
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