The Zacks Analyst Blog Highlights: JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs and Citigroup - Press Releases

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For Immediate Release

Chicago, IL - May 14, 2012 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include JPMorgan Chase ( JPM ), Bank of America ( BAC ), Wells Fargo ( WFC ), Goldman Sachs ( GS ) and Citigroup ( C ).

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Here are highlights from Friday's Analyst Blog:

JPM Trading Loss Hits Bank Stocks

 

Following the announcement of a huge trading loss at JPMorgan Chase & Co. ( JPM ), the banking sector stocks fell in the after-market trading on Thursday. In its quarterly regulatory filing, JPMorgan stated that its chief investment office (CIO) has incurred substantial mark-to-market losses during the first six weeks of the current quarter.

CIO is a unit of JPMorgan, which it uses to make broad-based bets in order to hedge its loan portfolio.

JPMorgan incurred a huge loss of nearly $2 billion in its synthetic credit portfolio, which was partially mitigated by securities gain of $1 billion. This portfolio is under Corporate division, within the Corporate/Private Equity segment. The company stated that Corporate is now expected to report a net loss of about $800 million for the second quarter, which was previously estimated to be a profit of $200 million.

This shocking revelation shattered the confidence level of the investors and JPMorgan's shares plunged nearly 7% in the after-market trading. This also dragged down the stock prices of the entire banking sector. Likewise, the shares of banking giants, like Bank of America Corporation ( BAC ), Wells Fargo & Company ( WFC ), The Goldman Sachs Group Inc. ( GS ), Citigroup Inc. ( C ), etc. were down more than 2% in after-hours trading.

Last month, Wall Street Journal reported that JPMorgan had been heavily investing in an index of credit default swap (a type of derivative), which was to protect the company against the potential losses on its large holdings of loans and bonds. However, JPMorgan's strategy backfired as the repositioning of the credit portfolio was poorly monitored and executed, leading the recent huge losses.

Further, JPMorgan incurred losses at a time when regulators had already set the date for the implementation of Volcker rule.  

Moreover, JPMorgan runs the risk of further hedge-related losses over the quarter. These losses are expected to significantly dampen the company's overall financial results in the second quarter.

Currently, JPMorgan retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term Neutral rating on the stock.

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BANK OF AMER CP (BAC): Free Stock Analysis Report
 
CITIGROUP INC (C): Free Stock Analysis Report
 
GOLDMAN SACHS (GS): Free Stock Analysis Report
 
JPMORGAN CHASE (JPM): Free Stock Analysis Report
 
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: BAC , C , GS , JPM , WFC

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