Stocks slip for a 2nd straight week as JPMorgan drags
The banking giant's $2 billion trading loss prompts big selling in the stock. Citigroup and Goldman Sachs also drop. The market rebounds -- and then fades -- after a report shows consumer confidence at a 4-year high.
Updated: 10 p.m. ETStocks fell back modestly today, as the weight of JPMorgan Chase's (JPM) announcement that it faced a $2 billion trading loss in one of its businesses ultimately offset a surprising surge in consumer confidence.
The JPMorgan announcement, which came after Thursday's close, sent the market lower in the morning. A rebound, set off by the University of Michigan's report of rising consumer confidence, boosted the market substantially, but the rally faded in the afternoon, leaving stocks lower for the second straight week. Crude oil (-CL) in New York and gold (-GC) fell to their lowest levels since December.
JPMorgan closed down $3.78 to $36.96, a touch higher than its low of the day, all because of a hedge that went very, very bad. The stock's performance pulled a number of financial shares lower as well. Technology shares rose on graphics-chip-maker Nvidia's (NVDA) upbeat earnings report and a batch of takeover talk. But weak economic data out of China sent crude oil to its lowest level since Dec. 19.
Late in the day, AMR (AAMRQ), the parent of American Airlines, said it is considering merger options with rivals, including US Airways (LCC), if such a move would create more value for creditors. AMR is working through a Chapter 11 bankruptcy.
The Dow Jones Industrial Average ($INDU) closed down 34 points to 12,821, its seventh loss in eight sessions. The Standard & Poor's 500 Index ($INX) was down 5 points to 1,353. The Nasdaq Composite Index ($COMPX) was flat at 2,934, and the Nasdaq-100 Index ($NDX) was off very slightly at 2,616.
Twelve of the 30 Dow stocks were higher, led by Verizon Communications (VZ), Intel (INTC) and AT&T (T). JPMorgan was the laggard. The beating the shares took during the week knocked JPMorgan down 14% for the week, although it is still up 11.2% for the year.
JPMorgan's disclosure has embarrassed one of the world's most powerful banks and high-profile CEO Jamie Dimon deeply. The company had managed to get through the 2008-09 financial crisis with few problems.
The aftermath of the disclosure was news that the Securities and Exchange Commission has opened a probe into the mess. At the end of the day, Fitch Investors downgraded the company's credit rating to A-plus from AA-minus. But the company still has an investment-grade rating.
The pressure on JPMorgan's stock hit shares of Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and Barclays (BCS), all big global banks. It has boosted chatter that maybe more regulation is appropriate for financial institutions.
But as today ended, JPMorgan's problem was mostly a JPMorgan problem.
Intel (INTC), Microsoft (MSFT), Walt Disney (DIS), Macy's (M), Wal-Mart Stores (WMT), U.S. Steel (X), Netflix (NFLX), Toyota Motor (TM): all higher. (Microsoft is the publisher of MSN Money.)
There were gains in the Dow Jones Transportation Average ($DJT), the Philadelphia Housing Sector Index ($HGX), the NYSE Arca Airline Index ($XAL) and the Philadelphia Semiconductor Index ($SOX).
The KBW Bank Index ($BKX) fell 0.54 to 46.40. The index tracks most of the nation's big banks. Not surprisingly, JPMorgan was the laggard. U.S. Bancorp (USB), the fifth-largest U.S. bank, was up 30 cents to $32.21. It doesn't have a big trading desk in London.
The major indexes finished with their second weekly loss in a row, with the Dow down maybe 1.5% and the S&P 500 off 0.9%. The Nasdaq is down 0.4%. For the year, the Dow is up 5.2%, with the S&P 500 up 8.1% and the Nasdaq up 13.2%.
| Markets for the week | ||||||||||||
| 5/11/2012 | 5/4/2012 | % chg. | YTD chg. | |||||||||
| Dow Industrials | 12,820.60 | 13,038.27 | -1.67% | 4.94% | ||||||||
| S&P 500 | 1,353.39 | 1,369.10 | -1.15% | 7.62% | ||||||||
| Nasdaq | 2,933.82 | 2,956.34 | -0.76% | 12.62% | ||||||||
| Russell 2000 | 790.06 | 791.84 | -0.22% | 6.63% | ||||||||
| Crude oil | $96.13 | $98.49 | -2.40% | -2.73% | ||||||||
| (per barrel) | ||||||||||||
| U.S. Dollar Index | 80.40 | 79.59 | 1.03% | -0.15% | ||||||||
| 10-yr. Treasury | 1.84% | 1.88% | -2.07% | -1.60% | ||||||||
| Gold | $1,584.00 | 1,645.20 | -3.72% | 1.10% | ||||||||
Crude oil and retail gasoline fall again
Crude oil in New York fell $1.22 to $96.13 a barrel, its lowest settlement since Dec. 19, when it settled at $94.05. Brent crude, the benchmark North Sea oil, was off 71 cents to $112.02 a barrel.
The national average retail price of gasoline slipped to $3.734 a gallon from Thursday's $3.739, AAA's Daily Fuel Gauge Report said. That's off 20.2 cents, or 5.1%, from the $3.936-a-gallon peak in early April. But the average price is still up about 14%. At its peak, gasolineu had been up 20.2%
Energy stocks were mostly lower, with Exxon Mobil (XOM), up 26 cents to $83.10, a notable exception.
Gold settled down $11.50 to $1,584 an ounce, its lowest level since its Dec. 30 settlement of $1,566.80 an ounce. Silver (-SI) settled down 28.8 cents to $28.89 an ounce, its lowest settlement since early January. Copper (-HG) dropped 4.25 cents to $3.648 a pound.
Gold was off 3.7% for the week and 5.3% for the quarter. It's still up 1.1% for the year. Silver dropped 2% for the week and is off 4.7% for the month. It's up 6.6.2% this year.
The dollar was up slightly against major currencies. Interest rates were lower, with the 10-year Treasury yield falling to 1.841% from 1.884% on Thursday.
| Energy prices -- New York close | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $96.13 | $97.08 | -8.33% | -2.73% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.9636 | $2.9834 | -6.93% | 1.70% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.5090 | $2.4870 | 9.80% | -16.06% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $3.0008 | $3.0102 | -3.96% | 12.92% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $112.26 | $112.73 | -6.09% | 4.54% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.7340 | $3.7390 | -2.15% | 13.98% | ||||||||
| (per gallon; AAA) | ||||||||||||
Consumers feeling a bit better
The market's reversal came after the University of Michigan survey showed consumer confidence rose in May to the highest level since 2008. It suggested that falling fuel costs are helping households look beyond a retreat in stocks and weaker job growth. Inflation expectations are quite a bit lower, IHS Global Insight noted.
The improvement in mood may help consumer spending, but not a lot, IHS thinks. Job growth is still a big problem.
Meanwhile, the Labor Department also said its producer price index, which measures wholesale prices for goods, fell 0.2% in April as inflation remained in check. Economists had expected it to be unchanged. The core index, which excludes food and energy prices, rose 0.2%.
Chesapeake Energy slumps
Chesapeake Energy (CHK) lost more than $1 billion in stock-market value in 46 minutes of trading today after the company disclosed it might be forced to delay plans to sell assets to fund its operations this year.
The nation's second-largest natural-gas producer spooked investors by discussing the potential delay in a Securities and Exchange Commission filing that had been expected a day earlier. The filing included new warnings it may need to delay asset deals to keep a key credit line. Shares fell $2.37 to $14.81.
Chesapeake has been suffering from decade-low prices for natural gas. Prices fell below $2 per million British Thermal Units in April but has jumped back to $2.51 per million BTU by today. Gas futures were up 12.6% this week and 18% since the end of March.
Nordstrom shares drop; Nvidia, McDermott International gain
Shares of upscale department-store chain Nordstrom (JWN) dropped $2.57 to $50.96. The company posted first-quarter profit that trailed analysts’ estimates as expenses for e-commerce investments increased.
Graphics chip-maker Nvidia shares jumped 79 cents to $13.21. The company earned 10 cents a share in the fiscal first quarter, in line with estimates. Revenue was $924.9 million, topping analysts' estimates of $916.2 million. Nvidia expects revenues of $990 million to $1.05 billion in the next quarter. The Street has been looking for $976 million.
McDermott International (MDR) shares rallied $1.48 to $11.37. First-quarter earnings exceeded the average analyst projection.
A struggle of a day
Verizon, Intel and AT&T were the leaders of the Dow today. JPMorgan and Bank of America (BAC), down 155 cents, to $7.55, were the laggards. Twelve Dow stocks were higher.
A total of 205 S&P 500 stocks were higher today, led by Netflix, Nvidia and Bed Bath & Beyond (BBBY). The trio were the top performers, among 53 Nasdaq-100 winners.
Chesapeake Energy, JPMorgan and Nordstrom were the S&P 500 laggards, with Green Mountain Coffee Roasters (GMCR) and for-profit college operator Apollo Group (APOL) the Nasdaq-100 laggards.
| Short hits from the markets -- New York close | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.090% | 0.00% | 800.00% | ||||||||
| 5-year Treasury note | 0.748% | 0.774% | -7.77% | -9.88% | ||||||||
| 10-year Treasury note | 1.841% | 1.884% | -3.86% | -1.60% | ||||||||
| 30-year Treasury bond | 3.015% | 3.051% | -3.02% | 4.36% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 80.404 | 80.257 | 1.97% | -0.15% | ||||||||
| British pound | 1.6077 | 1.6137 | -1.01% | 3.47% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.622 | £0.620 | 1.02% | -3.36% | ||||||||
| Euro in dollars | $1.29 | $1.29 | -2.44% | -0.26% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.774 | € 0.773 | 2.50% | 0.26% | ||||||||
| U.S. $ in yen | 80.06 | 79.90 | 0.08% | 3.84% | ||||||||
| U.S. $ in Chinese | 6.33 | 6.31 | 0.52% | 0.12% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.000 | $0.997 | -1.30% | 1.95% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.000 | $1.003 | -100.00% | -100.00% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,584.00 | $1,595.50 | -4.82% | 1.10% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.648 | $3.691 | -4.74% | 6.17% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $28.8900 | $29.1780 | -6.85% | 3.49% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $5.9700 | $6.0125 | -8.79% | -8.54% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $5.8100 | $5.875 | -8.40% | -10.13% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7897 | 0.8182 | -11.67% | -13.86% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.7715 | 1.7865 | -1.34% | -22.86% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $96.13 | $97.08 | -8.33% | -2.73% | ||||||||
| (per barrel) | ||||||||||||
Oh Well 2billion..?
Thats about the same amount of money
the IRS is giving some ILLEGALS yearly for their Tax refunds...
They can claim kids living in Mexico, That have Never been in
the United States...
Talk about the American Citizens getting the screws put to them....
There needs to be an investigation of the IRS...
I have no sympathy
. I am sure most people have no sympathy. So stop trashing our retirements for your greedy gain!!
The retail price of gasoline slipped to $3.734 a gallon from Thursday's $3.739, said AAA's Daily Fuel Gauge Report.
WOW....is everybody feeling all that extra savings ($.005) in their wallet. You can't even upgrade to "biggie size fries".
Forget the fries, let's tax the savings and pay off the debt.
the leprechaun..
Well put regarding the consumer confidence survey. This survey orginated in the 1950s by a professor at the University of Michigan. It basically consists of a random telephone survey to 500 people throughout the USA. It is a meaningless, subjective and worthless report and should no longer even be conducted. However, it becomes a very useful "tool" when the spin doctors want to give the appearance that everything is well etc. For the Dispatch Staff to even suggest that this is a positive driver in the market just reconfirms for me their ignorance as to what reality and the TRUTH really is.
why should the real tax paying, hard working people of the world suffer from these dummies mistakes.. they should all be put in jail, and fined.. but knowing how this will turn ouy, they will get a nice chunck when they re-sign, and the board will get some of that also.. but the tax-payer is the one who suffers..
you wonder why the ragg-heads hate us..
you think the ceo's care about us------think again..they will bury a marching band to get where they are going..
Two billion disappears, was probably more like six. Gosh JPM looks more like our bureaucracy every day. Oh that's right, they're already a member of that club. Not to worry, the Fed will print more bailout money, paper, paper everywhere, worthless paper everywhere. I'm glad I don't work for JPM, with all the finger pointing going on, it'd be like being drunk at a porcupine convention.
Peace
And the Spainish government is going to get money to loan the banks from where?
they are bankrupt themselves
this is so funny
ROFL
Spanish banks forced to raise extra 30bn euros capital The government took a 45% stake in Bankia earlier in the week
The Spanish government is to force its banks to take on an extra 30bn euros ($39bn; £24bn) of capital to cushion themselves against loans going bad.
The banks will have to raise the money or borrow from the government at an annual interest rate of about 10%.
JPM waited until after trading yesterday to lay the bad news on us, what do you want to bet they come out today after the market closes with how much they really lost and who else lost money on the deal!
Ease that info out in little bug bite's after the bell rings, Wall Street will have two days to whitewash how bad it really was.
Today means nothing, it will take a few days to find out the truth or as Paul Harvey used to say, 'The Rest of The Story"..
And in other news JPM, BofA and Wells fargo now want a piece of the 401k plans, bad thing is our government wants to get its hands on the 401k pot too. Chase and other banks are actively recruiting sales and management staff to entice companies to move the management of their 401ks over to them.
In 2008 the TOO BIG TO Fail could have been busted up and absorbed by more solvent regional banks but there was too much political payback to allow this. I think we need to take a look at Iceland, they busted up the offending banks, jailed the bank execs responsible for the problem and then recovered after a few years. All we did was bail out abunch of crooks and gave them more money to squander.
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