JPMorgan and Banks’ Blue Day: Monday’s IP Market Recap

by Marc Bastow | May 14, 2012 5:37 pm

[1]It was raining up and down the Eastern seaboard, but pouring in New York as the cloud over JPMorgan (NYSE:JPM[2]) spread across Wall Street to cover banking sector and markets overall. Stocks suffered a steep opening drop before a mild afternoon rally trimmed the fall — somewhat.

When all was said and done the Dow dropped 125 points, or 0.98%, to end at 12,695, while both the S&P 500 and Nasdaq each lost a fraction over 1%, finishing at 1,338 and 2,903, respectively.

JPMorgan’s $2 billion trading loss announced on Friday reverberated over the weekend, and the fate of its chief investment officer[3] was decided. JPM stock dropped 3% to end the day at $35.79.

Concerns over similar hedging-losses as yet unseen brought both Citigroup (NYSE:C[4]) and Morgan Stanley (NYSE:MS[5]) down over 4% on Monday, while Goldman Sachs (NYSE:GS[6]), Bank of America (NYSE:BAC[7]) and Wells Fargo (NYSE:WFC[8]) all suffered 2% losses.

Adding to the gloom was increasing uncertainty over the political situation in Greece, which still lacks a government, causing continued concerns over the eurozone’s stability.

On the upside, Groupon (NASDAQ:GRPN[9]) traded up almost 18% all day in anticipation of a strong quarterly performance. Investors were rewarded as the company reported better-than-expected revenue[10] for its first quarter on Monday, along with a strong future forecast. Shares were up an additional 10% in after-hours trading.

Beauty-products maker Avon (NYSE:AVP[11]) announced  Sunday it will respond to Coty’s latest offer to acquire the company[12] for $10.7 billion, or $24.75 per share, while also revealing that Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B[13]) was a backer of the bid. Shares of AVP were up 3% to $20 on the news.

Software maker BMC Software (NASDAQ:BMC[14]) gapped up 8% to $43 on news that private equity firm Elliott Associates has taken a 5% stake in the company, and Yahoo (NASDAQ:YHOO[15]) rose 2% to $15.50 on news that CEO Scott Thompson has left the company[16]. Hedge fund investor Third Point will obtain three of the four board seats it was fighting for as part of a proxy battle.

Best Buy (NYSE:BBY[17]) also rose on nonfinancial news, as founder Richard Schulze will step down as chairman [18]after a probe found he failed to tell the board about allegations that then-Chief Executive Officer Brian Dunn was having an inappropriate relationship with a female employee. Shares rose 1.5%.

Three Up

• Zynga (NASDAQ:ZNGA[19]): Up 6.28% (47 cents) to $7.95
• Chesapeake Energy (NYSE:CHK[20]): Up 4.79% (71 cents) to $15.52
• Arena Pharmaceutical (NASDAQ:ARNA[21]): Up 3.93% (25 cents) to $6.61

Three Down

• Shutterfly (NASDAQ:SFLY[22]): Down 8.87% ($2.36) to $24.24
• Silver Wheaton (NYSE:SLW[23]): Down 7.79% ($2.06) to $24.40 (Read more about SLW here[24])
• Advance Auto (NYSE:AAP[25]): Down 6.88% ($6) to $82.34

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he does not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2012/05/jpmorgan-and-banks-blue-day-mondays-ip-market-recap-jpm-gs-c-ms-wfc-bac/

---