Stock futures signal drop after JPMorgan loss
05/11/2012| 05:33am US/Eastern
PARIS (Reuters) -
U.S. stock index futures were down on Friday, pointing to a lower open on Wall Street, after JPMorgan Chase & Co stunned investors with news of "significant mark-to-market losses" that it said could "easily get worse."
Futures for the S&P 500 were down 0.42 percent, Dow Jones futures down 0.63 percent and Nasdaq 100 futures down 0.18 percent at 0910 GMT.
JPMorgan Chase & Co (>> JPMorgan Chase & Co.), the biggest U.S. bank by assets, said it suffered a trading loss of at least $2 billion from a failed hedging strategy, a disclosure that hit financial stocks and the reputation of the bank and its CEO, Jamie Dimon.
While other gains partially offset the trading loss, the bank estimates the business unit with the portfolio will post a loss of $800 million in the current quarter, excluding private equity results and litigation expenses. The bank previously forecast the unit would make a profit of about $200 million.
JPMorgan's stock traded in Frankfurt <JPM.F> were down 6.6 percent.
European stocks were down 0.5 percent in morning trade, dragged in part by a batch of disappointing earnings from bellwethers such as Telefonica (>> Telefonica SA) and Credit Agricole (>> CREDIT AGRICOLE). <.EU>
The telecom major posted a 54 percent drop in net profit after the value of its stake in Telecom Italia (>> Telecom Italia S.p.A.) plunged and prices fell in recession-hit Spain, while the French bank posted a 75 percent drop in quarterly profit, hit by 940 million euros ($1.2 billion) in Greece-related write-downs.
The European market trimmed losses, however, after Greek conservative leader Antonis Samaras said there were still hopes a government could be formed to avoid a repeat poll after Sunday's inconclusive election.
European heavyweight oil shares also rallied after a report in the Middle East Economic Survey said Qatar's sovereign wealth fund is in "very advanced talks" to buy a 3 to 5 percent stake in Royal Dutch Shell <RDSa.L> and is also negotiating a stake in Italy's ENI (>> Eni S.p.A.).
Business management software maker CA Inc (>> CA, Inc.) continued its run of market-topping profit, helped by rising demand at its North American business.
Intel Corp (>> Intel Corporation) Chief Executive Paul Otellini said he was not seeing the unexpected weakness in enterprise technology spending that Cisco Systems Inc (>> Cisco Systems, Inc.) CEO John Chambers cited when he forecast quarterly earnings below estimates.
Retailer Nordstrom Inc (>> Nordstrom, Inc.) reported a quarterly profit below Wall Street's expectations after pouring tens of millions of dollars into its e-commerce business, and said it would spend more on that during the rest of the year than previously estimated.
Auction house Sotheby's (>> Sothebys) posted a quarterly loss as expenses grew in the seasonally weak January-March quarter that also compared unfavorably to the year-ago period, when a private sale helped drive revenue.
Facebook Inc's <FB.O> record initial public offering is already oversubscribed, a source familiar with the share listing said, days after the world's largest social network embarked on a cross-country roadshow.
AT&T Inc (>> AT&T Inc.) has held talks to buy smaller rival Leap Wireless International (>> Leap Wireless International, Inc.) in recent months, according to people familiar with the matter, in the latest sign U.S. carriers are looking at acquisitions as a way to grow in a mature market.
Investors pulled cash from U.S.-domiciled equity mutual funds in the week ended May 9, reflecting market anxiety that Europe might reverse course from austerity measures after voters rejected politicians who pushed through spending cuts.
On the macro front, investors awaited the April Producer Price Index, due at 1230 GMT, as well as the Thomson Reuters/University of Michigan's preliminary May consumer sentiment index. Economists in a Reuters survey expect a reading of 76.2 compared with 76.4 in the final April report.
The Dow and the S&P 500 eked out a modest gain on Thursday, limited by a disappointing outlook from tech bellwether Cisco Systems and caution about Europe.
The Dow Jones industrial average <.DJI> rose 19.98 points, or 0.16 percent, to 12,855.04 at the close. The Standard & Poor's 500 Index <.SPX> added 3.41 points, or 0.25 percent, to 1,357.99. But the Nasdaq Composite Index <.IXIC> fell 1.07 points, or 0.04 percent, to close at 2,933.64.
(Reporting by Blaise Robinson; Editing by Ruth Pitchford)
Stocks treated in this article : Sothebys
, CA, Inc.
, CREDIT AGRICOLE
, Cisco Systems, Inc.
, Eni S.p.A.
, Intel Corporation
, JPMorgan Chase & Co.
, Nordstrom, Inc.
, Leap Wireless International, Inc.
, AT&T Inc.
, Telefonica SA
, Telecom Italia S.p.A.