A $2 billion blunder by the London derivates desk at JPMorgan Chase (JPM) has put egg on the face of well-regarded CEO Jamie Dimon, who heads the largest and, arguably one of the strongest, banks in the United States.
JPMorgan set up a last-minute conference call after the close of trading yesterday to tell the investment community that it lost $2 billion in the last six weeks in a trade designed to hedge against risks the company takes with its own money.
On the announcement, JPMorgan shares plunged nearly 7%, and many other financials are lower in sympathy. The financial sector has the second-heaviest weighting in the S&P 500 at about 15%, behind technology.
JPMorgan’s stock is also down better than 7% in the pre-market. The stock had been up 22% this year.
Futures overall are lower this Friday morning, with the Dow indicating a 60-point selloff at the open.
Yesterday was the first time in six consecutive days that the Dow finished in positive territory. The gain of 20 points proved well-needed relief for the market, as traders cheered a decline in the number of Americans filing for first-time unemployment benefits. There was also optimism that debt-laden Greece would not get booted out of the eurozone.
Researcher NPD Group says video game sales fell a whopping 42% in April from last April to $292 million. The decline came as there were fewer new game releases out last month. Many analysts think price cuts for both games as well as game consoles may be used to spur demand.