The Zacks Analyst Blog Highlights: JPMorgan Chase, Bank of America, Wells
Fargo, Goldman Sachs and Citigroup
CHICAGO, May 14, 2012
CHICAGO, May 14, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include JPMorgan Chase (NYSE:JPM), Bank
of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS) and
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Here are highlights from Friday's Analyst Blog:
JPM Trading Loss Hits Bank Stocks
Following the announcement of a huge trading loss at JPMorgan Chase & Co.
(NYSE:JPM), the banking sector stocks fell in the after-market trading on
Thursday. In its quarterly regulatory filing, JPMorgan stated that its chief
investment office (CIO) has incurred substantial mark-to-market losses during
the first six weeks of the current quarter.
CIO is a unit of JPMorgan, which it uses to make broad-based bets in order to
hedge its loan portfolio.
JPMorgan incurred a huge loss of nearly $2 billion in its synthetic credit
portfolio, which was partially mitigated by securities gain of $1 billion.
This portfolio is under Corporate division, within the Corporate/Private
Equity segment. The company stated that Corporate is now expected to report a
net loss of about $800 million for the second quarter, which was previously
estimated to be a profit of $200 million.
This shocking revelation shattered the confidence level of the investors and
JPMorgan's shares plunged nearly 7% in the after-market trading. This also
dragged down the stock prices of the entire banking sector. Likewise, the
shares of banking giants, like Bank of America Corporation (NYSE:BAC), Wells
Fargo & Company (NYSE:WFC), The Goldman Sachs Group Inc. (NYSE:GS), Citigroup
Inc. (NYSE:C), etc. were down more than 2% in after-hours trading.
Last month, Wall Street Journal reported that JPMorgan had been heavily
investing in an index of credit default swap (a type of derivative), which was
to protect the company against the potential losses on its large holdings of
loans and bonds. However, JPMorgan's strategy backfired as the repositioning
of the credit portfolio was poorly monitored and executed, leading the recent
Further, JPMorgan incurred losses at a time when regulators had already set
the date for the implementation of Volcker rule.
Moreover, JPMorgan runs the risk of further hedge-related losses over the
quarter. These losses are expected to significantly dampen the company's
overall financial results in the second quarter.
Currently, JPMorgan retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering the fundamentals, we also maintain a
long-term Neutral rating on the stock.
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