J.P. Morgan & Co. shares fell sharply Tuesday following a regulatory filing that provided details of the weakness in the venerable institution's trading business.

Morgan stock dropped to a new low for the year of $55.625, off $1.625, and was among the more notable losers on a day when the Dow Jones industrial average fell 91.52 points to 3,677.99.

Although analysts said the report contained no surprises, the selloff underscored how far J.P. Morgan has fallen since a few years ago when it flew high above its peers, seemingly immune to the asset quality problems that then afflicted the industry.

Indeed, its stock traded as high as $72 this year, before rising rates and the resulting losses in the derivatives market fueled uncertainty about J.P. Morgan and the other major wading banks.

"Derivatives fear has gripped the market." said Frank DeSantis, of Donaldson Lufkin & Jenrette Securities.

Derivatives are volatile financial contracts sold by Morgan and others, whose values reflect changes in interest rates, currencies, and other benchmarks.

In its quarterly disclosure to the Securities and Exchange Commission, the bank said its revenues from swaps and other interest rate contracts were $127 million, down from $221 million in 1993. Revenue from debt instruments fell to $80 million from $156 million. Foreign exchange contract revenue declined to $16 million in the third quarter from $27 million the previous year. And revenues from equity and commodities contracts also were down, falling to $59 million from $60 million in 1993.

Morgan also said that at the end of the third quarter, it had nearly $100 million of net deferred gains on closed derivatives contracts on its balance sheet, which it used for its own asset-liability management. However, the bank won't be able to reap those gains until 1996. It should record them as $15 million in losses for this year and $10 million in losses for 1995.

Overall, as previously disclosed, trading revenues were off significantly from the same period a year ago, falling to $282 million from $464 million.

Raphael Soifer, an analyst at Brown Brothers Harriman & Co. downplayed the significance of Morgan's 10-Q filing, saying investors generally do not pay much attention to the reports.

"All of the trading banks are down this year over last year," Mr. Soifer said. "This will be the fourth quarter of a down year for the big banks active in the capital markets."

Mr. DeSantis said the poor performance of Morgan's stock is related to its derivatives business but asserted that the bank is not being singled out because of its 10-Q filing.

He pointed out that Morgan's stock had fared well recently, compared with that of Bankers Trust New York Corp., and might have been due for an adjustment.

Bankers Trust has been hurt not only by poor trading revenues but also by two lawsuits complaining about its derivatives sales practices. Its stock closed at $55.125 on Tuesday, off $1.25.

"Last week Morgan was down in line with the other bank stocks," which have lost 6% to 7% over the past two weeks, Mr. DeSantis said.

Another reason for the poor performance of Morgan's stock, according to Mr. Soifer, is that it is one of the blue chips used to calculate the Dow Jones average.

"It's a very liquid stock," he said. "It tends to move up or down as people buy or sell in the sector."

Mr. Soifer also said there has been a lot of activity in recent days in the stock of banks with large investment portfolios. He cited PNC Bank Corp. and Banc One Corp. as examples.

"The prevailing sentiment is that if one bank has a problem, it carries over to the rest," he said. Both PNC and Banc One recently reported larger than expected losses in their securities portfolios, sending their stocks into a nosedive.

PNC's stock Tuesday was off 25 cents to a new yearly low of $20.125, and Banc One's hit a new yearly low of $24.625, down $1. Bank stocks in general fared relatively well early on Tuesday, but many were dragged down in the late-afternoon selloff.

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