Could the Big Banks Drag Down the Dow?


The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Isaac Pino and research analyst Lyons George discuss topics across the investing world.

In today's edition, Isaac and Lyons discuss JPMorgan's recent announcement that a London-based trader lost $2 billion on bets made during the first quarter. At a time when big banks have been pushing back against greater regulation, this news reverberated through the markets and sent shares of JPMorgan tumbling last Friday. The announcement weighed on the Dow index through early trading Monday morning as well. However, the two largest banks in the Dow, JPMorgan and Bank of America, only make up a combined 2.5% of the total index, so perhaps the market was broadly more concerned over recent developments in Europe. Investors are already weary of exposure to European markets, and the so-called "London Whale" trade did little to assuage their fears.

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At the time thisarticle was published Isaac Pinoand Lyons George have no positions in the stocks mentioned above. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo; and has the following options: short April 2012 $21.00 puts on Wells Fargo, short April 2012 $29.00 calls on Wells Fargo, short October 2012 $33.00 puts on Wells Fargo, and short October 2012 $36.00 calls on Wells Fargo.Motley Fool newsletter services recommendWells Fargo. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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