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JPMorgan Stock Reverses Friday Gains After Fed Rate Cut

JPMorgan (NYSE: JPM) stock price in early trading gave back almost all of the gains the bank made on Friday, amid investor’s lack of confidence that the Fed’s move of slashing interest rates to the lowest level since the 2008 financial crisis will bolster the economy against coronavirus.

The Fed has trimmed interest rates to zero range and plans to buy $700bn in government securities in an effort to provide more loans for consumers and businesses.

“The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook,” the Fed said in a statement. “In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4%.”

The Fed’s rate cut decision hit European and US stock markets as investors fear the Fed has lost a major policy tool after the latest cut— one that it could have been used at the time when the economy faces deeper trouble.

After airline stocks and energy companies, banks and financial services companies are turning out to be the biggest losers of coronavirus related volatility.

JPMorgan Stock Reverses Friday...

JPMorgan stock futures plunged almost 16% in Monday trading after posting an 18% gain in Friday trade. The banking sector took a hit, with Bank of America (NYSE: BAC), Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS) each traded at least 15% lower.

JPMorgan is the world’s largest bank and is led by chief executive Jamie Dimon (pictured), who is recovering from a heart attack he suffered earlier this month.

Lobby group the Financial Services Forum announced on Sunday that eight of America’s largest banks would suspend buybacks until the second quarter of this year.

“The decision on buybacks is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services,” the Forum said in a statement, citing the pandemic as an “unprecedented challenge”

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.