Dow Drops After JP Morgan Trading Loss; Consumer Sentiment Rises
May 11 2012 - 05:25PM
Dow Jones News
The Dow industrials edged lower to cap their biggest weekly
retreat of the year, as big trading losses at J.P. Morgan Chase
weighed on sentiment.
The Dow Jones Industrial Average fell 34.44 points, or 0.3%, to
12820.60, erasing earlier gains after reports of a Securities and
Exchange Commission review tied to J.P. Morgan's trading loss. The
blue-chip index fell 1.7% on the week, its worst weekly performance
since mid-December.
The Standard & Poor's 500-stock index retreated 4.6 points,
or 0.3%, to 1353.39. The Nasdaq Composite rose 0.18 point, or less
than 0.1%, to 2933.82.
"We had a great first quarter and were up almost 30% from the
lows in October, and now we're seeing a bit of a consolidation,"
said Jim Dunigan, managing executive of investments at PNC Wealth
Management. "I don't know that we'll have a significant decline,
but we may just drag along here."
Financial shares led the S&P 500 lower as J.P. Morgan Chase
fell $3.78, or 9.3%, to $36.96, its biggest percentage slide since
August. The drop accounted for 83% of the Dow's decline.
The blue-chip bank said late Thursday that it had taken $2
billion in trading losses in the past six weeks, stemming from bad
derivatives bets. The company said it could face an additional $1
billion in losses in the second quarter as a result of market
volatility.
The news shaved $14.4 billion from J.P. Morgan's market value,
as nearly 2.2 million shares in the bank changed hands, the most in
a single day since at least 1984, according to FactSet Research
Systems.
Telecom shares advanced. Verizon Communications and AT&T
rose, as Credit Suisse analysts recommended buying the shares,
saying they will benefit from "growing discipline around pricing
and subsidies in the wireless industry."
Consumer sentiment improved in early May, according to a Thomson
Reuters/University of Michigan index, bucking economists'
expectations for a decline. The Producer Price Index was down 0.2%
in April, while economists surveyed by Dow Jones Newswires were
expecting a decline of 0.1%. The core PPI, which excludes food and
energy, matched expectations with a rise of 0.2%.
In Europe, the Stoxx Europe 600 added 0.3%, as the
consumer-sentiment data and resilience in U.S. markets led a late
rebound. Benchmark indexes in France and the U.K. fell for the
second consecutive week, while the German DAX gained 1% on Friday
and rose for the week.
In Greece, Antonis Samaras, leader of the conservative New
Democracy party, said he was able to find common ground with
Democratic Left party leader Fotis Kouvelis, providing some hope
that a coalition government will be formed.
Also, the European Union said that while risks remain, it sees
initial signs of an economic recovery in Europe next year.
Asian markets fell, weighed down by J.P. Morgan Chase's news and
some disappointing data out of China. Japan's Nikkei Stock Average
and China's Shanghai Composite each shed 0.6%. Industrial output
growth in China slowed in April to the lowest level since May
2009.
Crude-oil prices lost 1%, to settle at $96.13, while gold prices
declined 0.7%, to finish at $1,583.60 a troy ounce. The dollar rose
against the yen but fell versus the euro.
In corporate news, Nordstrom slumped 2.57, or 4.8%, to 50.96,
after the high-end department-store chain reported fiscal
first-quarter earnings that missed analyst expectations, but it
affirmed its full-year outlook.
Arena Pharmaceuticals rallied 2.70, or 74%, to 6.36 after a Food
and Drug Administration panel recommended the approval of Arena's
lorcaserin to treat obesity.
Nvidia jumped 79 cents, or 6.4%, to 13.21 after the
graphics-chip maker reported fiscal first-quarter results that were
well above expectations and provided a second-quarter revenue
outlook that was above projections.
Ignite Restaurant Group, which operates the Joe's Crab Shack and
Brick House Tavern+Tap chains, rose 3.13, or 22%, to 17.13 on its
first day of trading. The company's initial public offering priced
at $14, the high end of its expected range.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com
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