Markets Dragged Into Second Weekly Loss

 |  Includes: DIA, QQQ, SPY
by: Midnight Trader
  • Dow Jones Industrial Average down 34.44 (-0.27%) to 12,820.60
  • S&P 500down 4.60 (-0.34%) to 1,353.39
  • Nasdaq Composite up 0.18 (+0.01%) to 2,933.82


  • Hang Seng Index down 1.30%
  • Shanghai China Composite Index down 0.63%
  • FTSE 100 up 0.57%

U.S. stocks turned mostly lower in late trade, giving back afternoon gains that followed better-than-expected consumer sentiment and giving in to another batch of disappointing news, including JPMorgan Chase & Co.'s (NYSE:JPM) $2 billion trading loss. The inability of a yet another Greek political party to pull together a splintered parliament and form a new government also worked to derail the mid-day rally.

Losses for financial stocks gathered steam over the final hour of the day, with consumer discretionary and technology stocks the only sectors to eke out small gains by the end of the day. Commodities also settled lower with gold falling after producer price data released earlier today kept a lid on limited expectation that the Federal Reserve will step in additional moves to bolster the U.S. economy.

Stocks rallied around mid-day after the Thomson Reuters/University of Michigan preliminary index of consumer sentiment advanced to a 77.8 reading from 76.4 in April, reaching the highest reading since January 2008. Final consumer sentiment numbers for the month are due out May 25.

Producer prices also unexpectedly fell 0.2% during April for the largest drop since October as energy costs retreated. Gasoline costs fell 1.7% last month with prices for residential natural gas and liquefied petroleum gas also declining, the Commerce Department reported. Economists polled by Reuters had expected prices at farms, factories and refineries to be flat last month. Excluding volatile food and energy costs, core wholesale prices rose 0.2%, in line with economist' expectations.

JPMorgan Chase shares finished down nearly 10% in response to massive trading losses by the bank's Chief Investment Office. The losses, initially disclosed in regulatory documents filed after the closing bell last night, resulted from "significant" mark-to-market losses in JPM's synthetic credit portfolio containing derivatives used to to hedge credit exposures. The U.S. Securities and Exchange Commission this afternoon announced an informal investigation into the trade while Congressional proponents for increased financial scrutiny also talked about possible hearings into the matter.

Relatively weak economic news out of China overnight also contributed to an initial sour mood. Chinese industrial production rose by 9.3% percent in April, the lowest level since May 2009, while retail sales growth slowed to 14.1% for a 14-month low. Fixed asset and property investment, along with power output growth, all fell.

In other company news, Nvidia Corp. (NASDAQ:NVDA) shares closed with a 6% gain, bringing considered support for the technology sector today, after the chip-maker's Q1 revenue and outlook beat estimates. Revenue for the quarter was $924.9 million, better than the analyst consensus of $916 million on Thomson Reuters. Earnings also topped expectations, coming in at $0.16 a share, compared with $0.10 per share in the Street view. For Q2, NVDA sees revenues in a range of $990 million to $1.05 billion, well ahead of the analyst consensus for $976 million in sales.

Also today, Arena Pharmaceuticals Inc (NASDAQ:ARNA) shares soared nearly 75% after a U.S. Food and Drug Administration advisory panel recommended the company's anti-obesity drug be approved for U.S. sales.

Crude oil for June delivery settled $1.08 lower at $96.03 a barrel with June natural gas rising 2 cents to $2.51 per 1 million BTUs. June gold fell $11.50 to finish at $1584 an ounce while July silver fell $0.29 to $28.91 an ounce. July copper also declined, losing 5 cents to settle at $3.64.


(+) GV, Sharp Improvement in Q1 Results

(+) OREX, Orexigen's Q1 Loss Narrows

(+) AVCA, Receives $50-million buyout offer


(-) BAC, Pressured by JPM's loss

(-) CECO, Said credit agreement expiring in November, overshadowing strong Q1 results.

(-) PEIX, Q1 Sales Rise, Net Loss Widens

(-) AMOT Standstill Q1 results chases investors

(-) RNDY, (-13.8%) Posts Q1 EPS, Revs Beat; Guides FY12 EPS In Line