JPMorgan weighs on futures as banks drop

U.S. stock index futures fell on Friday and were on track to extend the week's losses after JPMorgan Chase & Co revealed a trading loss of at least $2 bln from a failed hedging strategy that weighed on bank shares.
The news sent shares of the Dow component down 8.1% to $37.42 in premarket trading, and is the latest hurdle for a sector already besieged by the sovereign debt crisis in Europe and fears of slowing growth globally.
While other gains partially offset the trading loss, JPMorgan Chase estimates the business unit with the portfolio will lose $800 mln in the current quarter, excluding private equity results and litigation expenses. The bank had previously expected the unit to earn a profit of about $200 mln.
Jamie Dimon, the chief executive of the biggest U.S. bank by assets, cautioned that losses could grow by another $1 bln.
Bank of America Corp fell 3% to $7.47 before the bell while Citigroup Inc lost 3.8% to $29.50 and the Financial Select Sector SPDR was off 1.9% to $14.70. The S&P financial sector will likely extend its losses of almost 3% so far this month.
Financial stocks have been among the most volatile in recent months as investors question what the growth outlook for the U.S. and the debt crisis of Europe will mean for the group's profits. JPMorgan has fallen 11.4% since the end of March.
The CBOE VIX Volatility Index is up almost 10% this month in a sign of growing caution.
S&P 500 futures fell 7.1 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures sank 56 points and Nasdaq 100 futures lost 8.75 points.
For the week, the S&P is down 0.8%, the Dow is off 1.4% and the Nasdaq is down 0.8%. All three are on track for their second straight week of losses.
Investors are looking ahead to the April Producer Price Index, due at 8:30 a.m. (1230 GMT), as well as the Thomson Reuters/University of Michigan's preliminary May consumer sentiment index. Economists in a Reuters survey expect a reading of 76.2 compared with 76.4 in the final April report, with producer prices flat.
Software maker CA Inc late Thursday continued its run of estimate-beating profit, as demand rose at its North American business.
Nvidia Corp shares rose 8.1% to $13.43 before the bell after reporting adjusted first-quarter earnings that beat expectations.
With 449 of the S&P 500 companies reporting results through Thursday morning, 66.4% exceeded estimates, according to Thomson Reuters data, compared with more than 80% at the start of earnings season.
The Dow rose modestly to break a six-day losing streak on Thursday, though a weak outlook from Cisco Systems Inc capped advances. The S&P 500 could not hold enough gains to close above its April low. Still, the index has rebounded after falling to a two-month low near 1,340 on Wednesday.