Bank stocks suffered in midday trading on Wall Street. (Peter Foley / Bloomberg…)
NEW YORK — Investors are selling off shares of major U.S. banks in midday trading on Wall Street, following news of JPMorgan Chase & Co.’s stunning $2-billion trading loss.
While major indexes were initially down in early trading, all had turned positive three hours after the opening bell. The Dow Jones industrial average was up 42 points, or 0.3%, to 12,897. The Nasdaq was up 19 points, or 0.7%, to 2,953.
JPMorgan’s stock, however, was down sharply — losing $2.82, or 7%, to $37.92 a share.
After U.S. stock markets closed on Thursday, the investment bank disclosed a whopping $2-billion loss due to risky trades with the bank’s money that back-fired. JPMorgan said the bank could lose as much as $1 billion more from those bets.
Banking stocks overall were down 1.8%, while the benchmark Standard & Poor’s 500 index was up 4.8 points, or 0.4%, to 1,363.
Major investment banks -- Citigroup Inc., Morgan Stanley andGoldman Sachs Group Inc. — were all down about 3% in midday trading.
Not all banks were getting hammered, however. Institutions without large investment banking and trading operations are faring better on Wall Street. Wells Fargo & Co., for example, was up 6 cents, or 0.2%, at $33.25 a share.
In an analyst note, Mike Mayo, managing director at Credit Agricole Securities in New York, noted “major issues” with JPMorgan’s Chief Investment Office, asking “who was watching” that division.
Mayo’s note ended ominously, with a reference to a failed commodities brokerage: “We reiterate our view that this decade will show the worst revenue growth for banks since the decade of the Great Depression; either banks accept this fate or stretch for returns (as did MF Global) and suffer the consequences.”
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