|Page (1) of 1 - 01/13/12||email article||print page|
Banks lead stock market lower as JPMorgan post earnings drop; Europe downgrade rumors
NEW YORK (AP) ' Stocks are lower in early trading after earnings fell at JPMorgan Chase, the country's largest bank, and reports swirled that European governments may get their ratings cut soon.
The Dow Jones industrial average fell 154 points to 12,317 in the first hour of trading. That's a drop of 1.2 percent.
Bank of America and JPMorgan Chase & Co. led the Dow lower. Bank of America fell 4 percent, JPMorgan 3.6 percent. Other bank stocks were also hit hard. Morgan Stanley and Goldman Sachs Group Inc. both dropped by 3 percent.
The euro fell to its lowest level in 17 months after reports came out that Standard & Poor's may follow through on warnings to cut credit ratings for European governments. The euro dropped 1.2 percent against the dollar to $1.26. Borrowing costs for Italy and Spain rose.
The dollar and U.S. Treasury prices rose as investors moved money into lower-risk assets. The yield on the 10-year U.S. Treasury note fell to 1.84 percent from 1.93 percent late Thursday.
Standard & Poor's warned Dec. 5 that 15 countries that use the euro were at risk of getting downgraded, citing higher borrowing costs for top-rated governments and ongoing disagreements among European leaders.
The weakness at JPMorgan opened the season for bank earnings on a sour note. Though a pickup in the stream of U.S. earnings may help steer markets over the coming days, Europe's debt crisis is likely to remain the focus.
In other trading, the Standard & Poor's 500 index fell 17, or 1.4 percent to 1,277. The Nasdaq fell 33, or 1.2 percent, to 2,691.
Among stocks making unusually large moves:
' Diamond Foods Inc., which makes Emerald Nuts, plunged 8.8 percent after The Wall Street Journal reported that federal prosecutors opened a criminal inquiry into its financial practices. The Journal also reported that two large shareholders have dumped most of their stakes in the company.
' Safeway Inc. jumped 2.9 percent, the biggest gain in the S&P 500 index. An analyst at Jefferies placed a "buy" rating on the stock on the expectation that the grocery store chain will benefit from an improving job market, especially in California.
' Alpha Natural Resources fell 6.8 percent, the largest loss in the S&P 500. The coal company bought Massey Energy last year, and the U.S. Department of Justice is considering whether to prosecute those who ran Massey when its Big Branch mine exploded in 2010.