JPMorgan surprise loss of $ 2 billion trading attracted sell-off in financial stocks Friday, but the broader market edged higher as investors decided it was a problem for investment banks and other industries not.
The Dow Jones Industrial Average rose 11 points in midday trading, after rebounding from a decline of 76 points. The Standard & Poor’s 500 index rose two points to 1360. The Nasdaq composite index, which is heavily weighted in technology stocks, rose 14 points to 2947.
Financial stocks in the S & P fell 0.7 percent, while the other nine industry groups rose. For this, the other investment banks could thank JPMorgan, the largest bank in the United States. The stock plunged by 8 percent, leading other banks with large operations from Wall Street down with it. Morgan Stanley fell 2.7 percent and Goldman Sachs fell 2.6 percent. Citigroup fell 3.5 percent.
Oriented retail banks fared better, with Bank of America and Wells Fargo each display tiny drops.
JPMorgan’s blunder comes amid a political battle over how closely to regulate banks, although JP Morgan CEO Jamie Dimon said that the trades would not have been affected by the so-called Volcker, should enter into force this summer. However, the loss of 2 billion dollars is sure to be used as ammunition by those who campaign for stricter regulation of investment banks.
“It will definitely have a political impact,” said Randy Warren, chief investment officer at Warren Financial Service.
The Dow had fallen six days in a row before notching a small gain on Thursday. “It’s time for a little bounce, so it would not be surprising to see him bounce back a bit, even with the new JPMorgan,” Warren said.
Technology stocks did well. Intel rose 2 percent after it told analysts that it is on track to meet sales expectations. Tech investors were relieved that a day after Cisco Systems invited the sale of shares in high technology by being pessimistic about sales. Microsoft shares rose 1.9 percent. Manufacturer of semiconductors Nvidia jumped 8 percent, the highest in the S & P 500, after reporting earnings that were higher than analysts expected.
Consumer discretionary stocks were also up. Bed Bath & Beyond surged 4.7 percent retailer, one of the biggest gains in the S & P 500 Index, and streaming video and DVD company-by-mail Netflix has increased 6.3 percent.
Drug benefits manger Express Scripts rose 2.7 percent after posting a growth of order in their first quarter since its separation from the drugstore chain Walgreen.
Verizon rose 1.8 percent and AT & T rose 2.1 percent after Credit Suisse analyst Jonathan Chaplin raised his earnings estimates for this year and next. They make upgrades more expensive phone for customers, which should help the bottom lines of telephone companies, Chaplin wrote.
Also Friday, the Labor Department said that the index of producer prices, which measures price changes before they reach the consumer, fell 0.2 percent last month. It was the first decline since December and the biggest drop since October. Declines were led by the gas and energy prices. That’s good news for consumer spending.
Moreover, a closely watched measure of consumer confidence from the University of Michigan released Friday morning was better than analysts had expected. The index was at its highest level since January 2008.
Oil prices fell 41 cents to 96.67 dollars a barrel. Gold prices fell 0.6 percent to 1,585.60 per ounce.
European stocks were mixed. France the CAC 40 index fell slightly, but the British FTSE 100 rose 0.6 percent and Germany’s DAX rose 1 percent. Borrowing costs for Germany and France fell, while costs for Italy and Spain have increased as investors remain focused on Greece, where another general election is scheduled for next month Following the failure of attempts to form a government.