It was a great week for stocks, until today.
Ahead of the three-day holiday weekend, U.S. stocks are sharply lower on Wall Street Friday. There’s a host of negative catalysts weighing on the stock market.
The U.S. trade gap with the rest of the world widened more than expected in November to $47.8 billion. Key in the data is that U.S. exports to the euro-zone area were down because of growing fears of a recession sacking Europe. Europe buys a fifth of American-made goods.
There’s also the likelihood of a Standard & Poor’s credit downgrade of France and other European countries, although reportedly not Germany, the biggest economy in Europe.
Peter Bookvar, Managing Director at Miller Tabak, says S&P is really just playing catch up: “It's important to understand that #1, they are just following what the markets have priced in and #2, Fitch and Moody's in some circumstances have already moved ahead of S&P.”
As for France, it will likely lose its AAA rating at S&P, but Fitch earlier this week said it will maintain the top-notch rating on the country, at least for this year.
The bank stocks have had a nice rally in 2012; they’re losing some steam today on the heels of a 4Q earnings report from JPMorgan Chase. The company said profits of $3.73 billion were in line with estimates, but revenue of $22.2 billion missed. Those numbers are also weighing on shares of Citigroup, Morgan Stanley, Goldman Sachs, and Bank of America. Many of those financials report their results next week.
There were some positives coming from JPM, however. The bank’s annual profit hit a record $19 billion, and lending to consumers and businesses really picked up steam in the final months of last year.
There was also good news on the consumer front, but that’s not making much of a difference for stocks either. The University of Michigan preliminary January confidence reading came in better than expected. and was the best reading since May.