NEW YORK (AP) - A rare disappointing earnings report from JPMorgan Chase battered bank stocks on Friday and helped push the rest of the market lower. Rumors of imminent downgrades for the credit ratings of European governments drove the euro down and sent investors streaming into U.S. debt.
The Dow Jones industrial average fell 48.96 points to close at 12,422.06, a drop of 0.4 percent. Markets were little changed late in the day after France's finance minister confirmed that Standard & Poor's had stripped the country of its AAA credit rating.
Before the market opened, JPMorgan said quarterly profit declined 23 percent from a year earlier, slightly worse than what analysts expected. The bank's stock lost 2 percent, and other large banks followed. Morgan Stanley fell 3 percent.
It was the first time JPMorgan missed Wall Street expectations since the final quarter of 2007, a period that includes the financial crisis of 2008 and 2009. JPMorgan is widely considered one of the best-managed big banks. Traders figured that if JPMorgan had trouble as 2011 came to a close, the rest of the industry probably did, too.
"JPMorgan is the gold standard," said Phil Orlando, chief equity strategist at Federated Investors. "So what happens to the banks that aren't quite as strong and aren't quite as well-managed?"
The euro slipped to its lowest level in 17 months after reports surfaced that S&P would downgrade European governments. After the markets closed in New York, S&P announced cuts for France, Austria, Italy and Spain.
The euro dropped 1.1 percent against the dollar to $1.27. Borrowing costs jumped for France, Italy and Spain, countries at the center of the region's debt crisis.
In other trading, the S&P 500 index fell 6.41, or 0.5 percent to 1,289.09. The Nasdaq composite index fell 14.03, or 0.5 percent, to 2,710.67.