A huge slump in banking stocks driven by JPMorgan Chase & Co’s $2 billion trading disaster , made the U.S stocks fall , taking the Standard & Poor’s 500 index down to a two month low , which managed to overshadow the increase in consumer confidence.
The financial stocks , comprising 15 % of the S&P 500 , slumped by 1.2 percent ; taking the biggest drop amongst ten groups. After Jamie Dimon , CEO for JPMorgan , accepted that the lender had made “egregious” errors and the losses were inflicted upon them by themselves , the stocks sank by 9.3 % . As many as 216 million shares of the firm were traded , overcoming the previous one day record set during the crisis period of 2008. Also concerns spurred over demand for raw materials waning , as commodity stocks sank with industrial production in China slowing down to the pace of 2009.
The S&P 500 went down to 1353.39 ,fall of 0.3 percent . It also saw capping of the two week drop sliding by 3.6 percent in the time frame. The Dow Jones Industrial Average also slid 35 points and closed at 12820.60 . As much as 6.6 billion shares traded on exchanges in the U.S , conforming to the three-monthly average.
The deal has turned out to be a black eye for JPMorgan , which is usually considered to be better and safer among the large banks and which had managed to pass scott free during the 2008 crisis. Also with the trading debacle , JPMorgan and its Chief Jamie Dimon will be in weaker position in criticizing or pushing against the regulation , which has been debated plenty off late.
The chief investment office was taking positions on synthetic credit securities that were flawed, which continue to be volatile and could cost the bank another $1 billion in the current or the following quarter. The data showing increase in the consumer confidence which rose to the levels of four month high , was overshadowed by the concerns over financial industry.
A gauging of the diversified financial institutions revealed a 3.2 % tumble in the sector on the S&P 500 , the largest fall among 24 groups. JPMorgan slid 9.3 percent to $36.96 . Citigroup slumped 4.2 % while bank of America retreated 4.2 percent . Morgan Stanley and Goldman Sachs Inc. also slipped 4.2 and 3.9 percent respectively. The lawmakers and interest groups in the U.S who have been in favor of restrictions to be tightened on proprietary trading , will have their case bolstered by the JPMorgan loss.