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JPMorgan Chase & Co. (NYSE:JPM) is trading slightly higher on the day at $54.30 +0.25 (0.46%). However, over the past month the stock has fallen from $61.50 to its current level. This is a drop of 11.6%. JPMorgan Chase & Co. has fallen sharply while the Dow Jones Industrial Average and S&P 500 have stayed near their all-time highs. This shows major relative weakness. Investors are starting to wonder if there is something fundamentally wrong with JPMorgan Chase?
This issue with the bank stocks is simply an economic one mixed with interest rates, with a small pinch of worry about the unknown. Investors are starting to realize that JPMorgan Chase & Co. along with other banks are stuck in place, unable to really improve earnings because while the economy is inching, it is not growing quickly. In addition, housing starts and sales have slowed dramatically. This reduces the amount of loans they will be making. It has become clear that even as the Federal Reserve withdraws from their quantitative easing, stocks like JPMorgan Chase & Co. are not going to benefit from higher interest rates. In fact, recently interest rates have actually fallen. This means any new loans by JPMorgan Chase & Co. will not make more money for the bank. Lastly, many worry about the new regulations being placed on the banks as well as what is lurking under the radar in terms of fines from the DOJ and maybe a new rush of bad loans.
All these factors listed are the reasons why investors are moving away from stocks like JPMorgan Chase & Co. At this point, it makes little sense to be in the banks until more clarity is seen.