JP Morgan, Goldman Decline; Oil Below $113

123jump.com Staff
12 Aug, 2008
New York City

U.S. market averages fell after financials fell. J P Morgan in the latest regulatory filing suggested that losses are likely to increase in the second half of the year. Analyst lowered their views and earnings on Goldman Sachs. Crude oil fell below $113 a barrel, lifting transportation and airlines stocks. AMR, the parent of American Airlines rose after positive comments from a broker.

[R]2:45PM New York – Weakness in financials dragged market averages lower.[/R]

Market averages fell as financials traded lower after filing from JP Moran suggested higher losses in the second half. Crude oil futures fell below $113 a barrel.

Financial stocks dropped as worries of more losses and dividend cuts made rounds. Analysts cut the earnings estimates of Goldman Sachs. JP Morgan in a regulatory filing reported $1.5 billion of net loss in the quarter to date and said conditions have deteriorated from its last earnings release.

The company in the latest 10-Q filing noted, “Based on management’s current economic outlook, quarterly net charge-offs in the home equity portfolio could continue to increase during the remainder of 2008; prime and subprime mortgage net charge-offs are expected to continue to rise significantly during the second half of 2008, with deterioration expected to continue into 2009.

Continued housing price declines could also lead to increases in non-credit losses, including losses on repurchases of previously securitized loans and higher mortgage reinsurance losses. Management expects the managed net charge-off rate for Card Services to increase and potentially average 6% during 2009.”

JP Morgan retail financial services portfolio has $95 billion of loans, $14.8 billion in subprime mortgage loans, $47.2 billion in prime mortgage portfolio and $155.4 billion in credit card receivable portfolio.

JP Morgan ((JPM)) stock fell $3.13 to $38.76. The decline in JP Morgan dragged Wachovia Bank ((WB)) lower by $1.75 to $16.46 and Bank of America ((BAC)) by $1.41 to $31.97 and Citigroup ((C)) by 80 cents to $19.01.