Stock index futures tumbled Friday as investors digested the news of JPMorgan Chase’s $2 billion trading loss as a result of a failed hedging strategy.
JPMorgan said it suffered a trading loss of at least $2 billionfrom a failed hedging strategy. 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’strading loss dragged on the entire banking sector, pulling shares of Citigroup and Bank of America lower in pre-market trading. At least four brokerages slashed their price target on JPMorgan, while FBR and Stifel cut their rating on the firm to "market perform" from "outperform" and "hold" from "buy," respectively.
European shares trimmed earlier lossesafter Greek conservative leader Antonis Samaras said there were still hopes a coalition government could be formed to avoid a repeat poll after Sunday's election.
On the economic front, producer prices posted a surprising dropof 0.2 percent in April as energy costs declined, according to the Labor Department. Economists had expected prices to be flat.
In addition, the Thomson Reuters/University of Michigan's May preliminary reading of consumer sentiment will be reported at 9:55am ET. Economists expect a reading of 76.2 compared with 76.4 in the final April report, according to a Reuters survey.