Financials Drag on the Dow Jones Today

JPMorgan Chase (NYSE: JPM  ) and the financial sector are weighing on the Dow Jones Industrial Average (DJINDICES: ^DJI  )  down amid mixed reports on the economy. As of 1:15 p.m. EDT the Dow and the S&P 500 (SNPINDEX: ^GSPC  ) were both within 0.1% of breakeven.

The financial sector is dipping today after the International Monetary Fund lowered its growth estimates for the U.S. economy this year to just 2% growth. In April the IMF had projected the U.S. to grow 2.8% this year.

Source: International Monetary Fund.

The IMF said the reason for its forecast cut was that the "harsh winter conspired with other factors (including inventory drawdown, a still-struggling housing market, and slower external demand) [so that] momentum faded in the U.S economy." While the IMF still expects 2015 growth of 3%, the IMF's forecast cut follows the World Bank's cut of its 2014 U.S. growth estimate from 2.8% to 2.1%.

Slow growth means the Federal Reserve will likely keep rates low longer than the market had expected. The financial sector is being challenged right now by low long-term interest rates, as banks profit from the spread between short-term rates and long-term rates. As long-term rates continue to drop and the Federal Reserve keeps short-term interest rates effectively at zero, banks will struggle to profit.

With the news of the forecast cut, financials are weighing on the stock market today.

Source: Finviz.com.

Leading the Dow Jones financials' drop today is JPMorgan Chase, down 0.3%. Aside from the aforementioned obstacles, JPMorgan is now facing a lawsuit by the City of Miami for predatory and discriminatory lending. This comes just weeks after the City of Los Angeles filed a similar suit against JPMorgan Chase and other major mortgage lenders.

The fallout from the financial crisis continues to dog JPMorgan Chase and other major mortgage-lenders. While bank balance sheets are the strongest they've been in years, big banks continue to pay the price for their conduct during the financial crisis and its aftermath, and they continuously have to devote a significant portion of their profits to pay for more lawsuits.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2995831, ~/Articles/ArticleHandler.aspx, 12/20/2014 5:00:18 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement