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A week ago JPMorgan’s (NYSE: JPM) stock price opened at $41.36 a share, up 24.4% for the year. This morning the big bank stock dipped below $35 a share, about a dollar above where it started the year.
What a difference a week makes. That’s what losing more than $3 billion in derivatives trading will do to a bank – especially when it’s America’s biggest bank.
Investors are clearly losing confidence in JPMorgan after the bank reported the major trading losses earlier this week. The losses were initially believed to be in the $2 billion range; now the losses are estimated to be more than $3 billion – and counting.
Last Thursday alone, JPMorgan stock price tumbled 9.7% after the multi-billion dollar losses were announced. Company CEO Jamie Dimon used the words “unbelievably ineffective” and “egregious mistakes” to describe the big bank’s recent trading strategy.
Until news of the losses broke, JPMorgan was shaping up as one of the few success stories among U.S. banks in the post-recession era. In late March shares of JPM stock were trading at more than $46, just a couple bucks less than the stock’s apex before the recession in late 2007 and early 2008.
While JPMorgan’s core businesses remain solid – the company did $5.56 billion in earnings last quarter – its sudden string of bad trades is sure to leave a bad taste in investors’ mouths for months to come.