While you were sleeping: JPMorgan falls on wider losses

BUSINESSDESK: Wall Street dropped as JPMorgan shares plunged and economic data indicated further weakness ahead on both sides of the Atlantic.

Claims for US unemployment insurance payments fell by 6000 to 386,000 in the week ended June 23 from a revised 392,000 the prior period that matched the most this year, according to Labor Department figures.

American gross domestic product rose at a 1.9% annual rate in the first quarter, the Commerce Department said.

The pace of expansion, unchanged from a prior reading, was well below the 3% increase in the fourth quarter. Motor vehicle output accounted for more than half of this quarter's advance.

None of these data bode well for the second quarter.

"We view the economy as vulnerable to negative shifts in sentiment and escalating uncertainty," Michael Gapen, a senior economist at Barclays in New York, told Reuters.

Shares of JPMorgan shed more than 4% on a report in the New York Times that its trading losses from credit derivatives may total as much as $US9 billion, surpassing the company’s initial estimate.

In another surprise, President Barack Obama earned a key victory as a ruling by the US Supreme Court upheld the centrepiece of his signature healthcare overhaul law that requires that most Americans to get insurance by 2014 or face a penalty.

In Europe, bank stocks didn't fare much better after record fines for Barclays, announced yesterday, for falsifying London interbank offered rate submissions sent the stock into a tailspin amid concern lawsuits will follow.

In late afternoon trading in New York, the Dow Jones Industrial Average fell 1.38%, the Standard & Poor’s 500 Index dropped 1.24%, while the Nasdaq Composite Index declined 1.98%.

Meanwhile, European Union leaders began a two-day summit that is widely expected to produce less than impressive results as opinions about how to stem the debt crisis vary between German Chancellor Angela Merkel and other European leaders.

"Angela Merkel was very adamant about the fact she isn't going to give an inch or two – the markets at this point may be looking at the statement [at the conclusion of the summit] to see if the actions match her rhetoric," Fred Dickson, chief market strategist, DA Davidson & Co in Lake Oswego, Oregon, told Reuters.

The mood was not helped by data showing Germany's jobless rate climbed more than expected in June, rising for the fourth month in a row. It's another clear indication that the euro zone's largest economic engine is starting to sputter, too.

That is clearly dampening confidence. An index of executive and consumer sentiment in the euro zone fell to 89.9 in June from a revised 90.5 in May, according to European Commission statistics. That is the lowest since October 2009.

Spain's bond yields rose, with the 10-year yield rising as high as 7.01%, according to Bloomberg News. It was last steady at 6.93%.

Europe's Stoxx 600 Index closed the day with a 0.5% slide on the previous session. Benchmark indexes fell in Frankfurt, London and Paris.