(Bloomberg News) U.S. stock futures fell as investors assessed a disclosure by JPMorgan Chase & Co., the biggest U.S. bank by assets, that it had a $2 billion trading loss after positions in credit securities proved riskier than expected.
JPMorgan tumbled 6.7 percent after the close of regular trading as Chief Executive Officer Jamie Dimon said the bank made egregious mistakes and that trading losses were "self inflicted." Bank of America Corp., Citigroup Inc. and Morgan Stanley retreated at least 2.7 percent.
Standard & Poor's 500 Index futures expiring in June slumped 0.8 percent to 1,346.20 at 5:36 p.m. New York time. Dow Jones Industrial Average futures dropped 91 points, or 0.7 percent, to 12,743.
"JPMorgan has held to a higher standard among the banks," Walter Todd, who oversees about $950 million as chief investment officer at Greenwood Capital in Greenwood, South Carolina, said in a telephone interview. "If this happens to them, it raises the question, if they have these issues, who else does?"
JPMorgan slumped 6.7 percent to $38. It gained 0.3 percent in regular trading, paring a rally of as much as 1.9 percent. "Obviously this is not how we want to run a business," Dimon said in a conference call today.
Bank of America lost 2.7 percent to $7.49. Citigroup retreated 3.8 percent to $29.50. Morgan Stanley slumped 2.8 percent to $15.16.
Banks had the biggest gain in the S&P 500 among 24 groups in regular trading, adding 1.5 percent, as a measure of European lenders rallied. Federal Reserve Chairman Ben S. Bernanke said the U.S. banking system is stronger and more resilient while still facing challenges on credit quality and liquidity.
'Restore Their Health'
"Banks still have more to do to restore their health and adapt to the post-crisis regulatory and economic environment," Bernanke said today in a speech at the Chicago Fed's annual conference on banks. As the economic expansion proceeds, "a financially stronger banking system will be well positioned to expand its lending."
The S&P 500 rebounded in regular trading as Greece attempted to form a new government and a decline in American jobless claims helped allay concern of a labor market setback. Greek political turmoil extended into a fourth day after the inconclusive May 6 elections, with coalition talks deadlocked, raising the possibility that another election will have to be held as early as next month. The standoff has reignited European concerns over Greece's ability to hold to terms of its two bailouts negotiated since May 2010.