Wall street's Week of Worry Ends With JP Morgan Mea Culpa

In a week that will be remembered as one in which the Euro crisis came front and center, Wall Street turned its eyes upon an unlikely victim Friday, that being JP Morgan Chase.

The bank known for its "fortress" balance sheet (pure baloney) confessed to have had made a terribly wrong bet on a risk hedge - a la MF Global? - and poof went $2 billion. CEO Jamie Dimon explained how badly the bank had mistaken the markets in a conference call with journalists Thursday night after the close.

Details were sketchy, though it was widely assumed that there would be other victims in the trade involving a British trader known quaintly as "the Whale." The issue points up that even the brightest of the bright can make mistakes - and big ones at that.

While JPM's misplaced risk hedge sent futures into the tank pre-open (as if they needed any help with that), stocks initially sank, then rallied sharply into positive ground in the morning session, though all gains were ephemeral and summarily whisked away by the close, ending Wall Street's worst week in more than seven months.

Even though losses were tiny - and the NASDAQ managed to close positive by 0.18 points - signs of calamity were everywhere, from German citizens daring Greece to default and leave the Euro, to massive misapprehension over the proposed "Volker Rule" in light of the Morgan fiasco, to spiking Spanish bonds, slowing growth in China and a deflating PPI, which came in under expectations at -0.2% for April.

As the session ended with everybody closing positions in case some new, terrifying developments took place over the weekend, the once mighty, banker-run trading casino closed out the week with players seeking solace and probably more than a few strong drinks to soothe their jangled nerves.

Nobody can tell how events will play out exactly during the coming weeks, though, from the tenor of the trade this week, it seems pretty likely that conditions are not going to materially improve any time soon.

TGIF, indeed.

Of note, the Dollar Index advanced for the tenth straight day, explaining why precious metals have been pounded down so roughly over the past two weeks; and, new lows bettered new highs for the fifth day in the past six.

Dow 12,820.60, -34.44 (0.27%)
NASDAQ 2,933.82, +0.18 (0.01%)
S&P 500 1,353.39, -4.60 (0.34%)
NYSE Composite 7,816.48, -36.27 (0.46%)
NASDAQ Volume 1,692,045,125
NYSE Volume 3,727,488,000
Combined NYSE & NASDAQ Advance - Decline: 2225-3322
Combined NYSE & NASDAQ New highs - New lows: 107-131
WTI crude oil: 96.13, -0.95
Gold: 1,584.00, -11.50
Silver: 28.89, -0.29