By Carla Mozee | From | On May 11th,2012

LOS ANGELES (MarketWatch) — Shares of J.P. Morgan Chase & Co. fell Friday evening, with losses accelerating after a ratings downgrade, adding to sharp dayside losses in the wake of the bank’s revelation of a $2 billion trading loss.

Late-traded J.P. Morgan shares fell 0.8% to $36.68 in heavy volume. The losses slightly deepened after Fitch Ratings downgraded its long-term issuer default rating on J.P. Morgan to A+ from AA-, and its short-term IDR to F1 from F1+.

All parent and subsidiary long-term ratings may faces further downgrades, said Fitch.

J.P. Morgan’s shares finished the day session down 9.3%, their steepest decline since August after the company said it was facing a $2 billion trading loss related to a failed hedging strategy.

Fitch said it views the size of the loss as manageable. “That said, the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity. It also raises questions regarding JPM’s risk appetite, risk management framework, practices and oversight,” all of which are key credit factors, said Fitch.

The “potential reputational risk and risk governance issues raised at JPM are no longer consistent with an AA- rating,” Fitch said in a statement.

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The unexpected announcement from J.P. Morgan came just weeks after its chief executive dismissed concerns about the unit responsible for the trading loss. Read more about J.P. Morgan’s unexpected trading loss.

Other financial stocks late Friday swung between gains and losses following their dayside declines. Morgan Stanley shares rose 0.2% to $14.98 in evening trade,. Goldman Sachs rose 0.4% to $102.58 while Bank of America  shed 0.4% to $7.52. Read about Friday’s losses among financial stocks.

J.P. Morgan shares weighed on the Dow Jones Industrial, which finished Friday’s session down 34 points, or 0.3%, to 12,820.60. The S&P 500 Index  fell 0.3% to 1,353.39. The Nasdaq Composite Index edged higher by less than 1 point at 2,933.82.

Carla Mozee is a reporter for MarketWatch, based in Los Angeles.

This article was originally posted at

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