POSTED: Friday, May 11, 2012 - 9:00am
UPDATED: Friday, May 11, 2012 - 9:14am
NEW YORK —
JPMorgan Chase's multi-billion dollar trading blunder dragged down bank stocks in premarket trading Friday, setting up a rough session for Wall Street finance firms.
JPMorgan led the bank stock declines, with its stock dropping more than 8%. The bank revealed Thursday, after the close of markets, that it suffered trading losses of $2 billion since the start of April.
The problems affected other major banking stocks. Morgan Stanley, Goldman Sachs and Bank of America fell more than 3% in premarket trading. Citigroup was down nearly 4% and Wells Fargo slipped 2%.
Bank stocks were already under siege. The KBW index of bank stocks has fallen 2.5% over the last five trading sessions, without even showing the impact of JPMorgan's bad trade.
The trade prompted an unusual impromptu teleconference with Chief Executive Jamie Dimon and analysts, at which he divulged that net losses could exceed $800 million by the end of the second quarter for the company's corporate unit. Before that announcement, a net gain of $200 million was forecast for the unit.
Dimon told analysts that the losing trades were the result of "sloppiness" and "bad judgment," but he shrugged off a question about whether other banks were affected.
"Just because we're stupid doesn't mean everyone else was," said Dimon on the call.
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