US Market Drops On S&P's Action Of Ratings Downgrade In Europe (14-Jan-2012)
The US markets closed lower on Friday, trimming weekly gain on news that Standard & Poor's was downgrading the debt of several European nations. The pessimism escalated further over J.P. Morgan Chase & Company reporting a profit drop in earnings and as investors fretted a possible Greek default. The first major US bank to report results for the fourth quarter, J.P. Morgan's revenue fell to $22.2 billion on an adjusted basis, below estimates. However, a report showing consumer sentiment rose in January failed to boost market sentiments. US consumers' confidence rose more than forecast in January to the highest level in eight months, a sign household spending may hold up as the new year begins. The Thomson Reuters/University of Michigan preliminary index of confidence rose to 74 from 69.9 at the end of December. However, the benchmark gauge of US company credit risk rose from almost the lowest level in more than two months on concern Europe's sovereign-debt crisis will slow the global economic recovery.
In Europe, Standard & Poor's had lowered the long-term ratings of Italy, Portugal, and Spain by two notches, and the long-term ratings of Austria and France by one notch. Rating of France was cut to AA+ which has a negative outlook. Belgium, Estonia, Finland, Ireland, Luxembourg and the Netherlands also had their ratings affirmed by S&P. The ratings agency stated that initiatives taken by European policymakers in recent weeks may fall short of fully addressing systemic stresses in the euro zone. Also, the group representing Greece's bank creditors stated that talks with the government have paused for reflection after the discussions failed to produce a constructive consolidated response by all parties.
The Dow Jones Industrial Average closed lower by 48.96 points, or 0.39 percent, at 12,422.10. The S&P 500 was down by 6.41 points, or 0.49 percent, at 1,289.09, while the Nasdaq closed down 14.03 points, or 0.51 percent, at 2,710.67.
Indian ADRs closed mixed on Friday, Infosys Technologies was down 0.77%, HDFC Bank was down 0.23% and Dr. Reddy's Lab was down 0.21%. On the flip side, ICICI Bank was up 0.67% and Tata Motors was up 0.06%.
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