The financial stocks slipped on Wednesday, moments before the speech of James Bullard, the president of St Louis Federal Reserve. The SPDR Fund of the Financial Select Sector, used in the tracking of stocks in the Standard and Poor’s 500 (S&P 500), experienced a slip of 0.1%. During this slip, the Bank of America experienced a gain of almost 1.2%, which became the biggest gain in the DJIA (Dow Jones Industrial Average). J.P. Morgan Chase & Co was also among the top gainers in the Dow after it experienced a gain of 0.5%.
Meanwhile, the United States government charged two people, formerly employees of the J.P. Morgan, over the a trading debacle known as London Whale which led to the bank loosing over $6 billion. The two employees, Julien Grout and Javier Martin-Artajo, who worked at the banks London offices, have been under investigation by the Justice Department on whether they tried to hide the losses in trading. Due to this huge loss, there was increased scrutiny from the investors and government and the salary of Jamie Dimon, the Chief Executive, was reduced by half. The government however declined to prosecute Bruno Iksil, another J.P. Morgan employee, according to reports in the media.
Elsewhere during the Wednesday slip of the stock market, Goldman Sachs Group Inc fell by 0.1% and Morgan Stanley fell by 0.3%, Citigroup Inc rose by 0.3% in the early period of trading. Subsequently after their 2nd quarter earnings, analysts of the Morgan Stanley Bank made public their ideas for top investments with their top 2 picks being Bank of America and J.P. Morgan. Bank of America experienced a growth in the top-line with the costs experiencing a great reduction. The earnings-per-share estimates for J.P. Morgan were raised by 2 percent for the year 2013 and by 3% for the year 2014 by the analysts on a lower net charge based on the good credit that is shooting from the housing market that is improving.
The financial market experienced a strong 2nd quarter and according to the Morgan Stanley Report, 91% of all the firms came in or were above the estimates of the earnings. Positive comments on the improvements in the commercial real estate, housing and the slow though with a better potential loan growth were received from the analysts. The analysts were also optimistic on many sectors of the financial market including the mid-cap banks, large-cap banks, specialty finance, alternative asset managers and life insurance. Among the top picks for investments by the analysts were Prudential Financial Inc, First Republic Bank and Blackstone Group L.P.
Elsewhere in other news, Carl Icahn, an activist investors posted tweets saying he held a big position in leading Smartphone Company Apple Inc. The investor also claimed that Apple had been undervalued extremely. The billionaire investor, well known for his corporate raids during the 1980s said that he wanted a bigger share of the iPhone maker’s buyback. The investor spoke to Tim Cook, the Chief Executive Officer, saying that he planned to make another statement soon.