The largest exchange traded fund tracking the U.S. financial sector was in the red Friday after JP Morgan (NYSE: JPM) revealed a $2 billion loss attributed to a trader known as the “London Whale.”

The sector ETF pared its 2% premarket decline and was lower by 0.7% at last check.

JP Morgan shares were down 8%. The stock is the second-largest holding in the $6.4 billion Financial Select Sector SPDR (NYSEArca: XLF) at 8.6% of the portfolio.

The bank said its chief investment office has suffered $2 billion in losses in its synthetic credit portfolio so far in the second quarter.

“Based on management’s statements that this synthetic credit-related hedge has been marked to market, we would assume that the full existing loss content currently embedded in this position has been realized,” Guggenheim Securities analysts said in a note. “While this position can experience incremental losses related to future market volatility, there shouldn’t be unrealized losses remaining hidden on the balance sheet.”

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