Stock Market Watch

JP Morgan Shares Tumble on Trading Losses, Bank Downgraded a Notch By Fitch (JPM)

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JPMorgan ChaseJP Morgan Chase & Co. (NYSE: JPM) shares plunged 9.3% on Friday, amid heavy volume trading as bank’s disclosure of huge trading loss of at least $ 2 billion, weighed on market sentiment. Trading volume of JP Morgan stocks was seven times more than the monthly normal average due to massive sell-off.

The surprise disclosure on Thursday from bank’s CEO, Jaime Dimon, decimated $14.4 billion from JP Morgan’s market value.  According to FactSet Research System, almost 2.2 million shares changed hands, the most in a single day since at least 1984.


More bad news came for the bank after market’s close when credit rating agency Fitch Ratings downgraded it a notch from double- A- minus to A- plus. The bank is now placed four notches below the top rated triple-A grading.

The bank is now put on the watch for other possible downgrades. After the evening bell ring- JP Morgan’s shares tanked further 0.5%, to $36.79.

Commenting over the downgrade, Fitch Ratings said while the size of the trading loss is manageable, its magnitude, (bank’s exposure to risky bets)  “implies a lack of liquidity” and raises questions about the bank’s risk management.

Bank’s CEO Dimon described wrongly placed bets as “egregious mistakes” and warned the losses could deepen this quarter and beyond.

Meanwhile, another credit rating agency Moody Investors Service said that is taking a close look at banks with capital markets operations and placed J.P. Morgan, along with 16 others, on review for a potential downgrade.

The news hit the entire banking sector on Friday with The Standard & Poor’s 500 financial sub-index edging down 1.2% even as Goldman Sachs Group (NYSE: GS) lost 3.9% at $102.13, Morgan Stanley (NYSE: MS) fell 4.2% to $14.95, and Citigroup (NYSE: C) slid 4.2% to $29.35.

 

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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