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Consumer Credit Concerns "Hitting" Stocks

Consumer spending didn't slow down that much but apparentlyconsumer bill paying has.

Look at Capital One .The company is taking a $1.9 billion provision for loan losses in the fourth quarter and cut its full year profit forecast by more than 20 percent, blaming rising consumer loan losses and higher legal reserves. Capital One Financial said its 30-day or more delinquency rate for its managed portfolio was 3.87 percent, or $5.86 billion for December, up from 3.68 percent or $5.48 billion in November.

Credit concerns are weighing on stocks this morning, as retailers report December sales. Traders are worried that Capital One's comments are the beginning of a new cycle of credit pain, and stocks are dipping on credit concerns.

The retail sales themselves are lackluster with apparel sellers the weakest group. Wal-Mart reported a 2.4 percent rise in same store sales in December, slightly better than analysts expected. Wal-Martforecast 2 percent sales rise in January and reaffirmed earnings guidance for the quarter. But it said its fourth quarter results are more "pressured by higher interest expense" than last year.

Costco , a standout, said sales rose 7 percent. Discount chain Target was down 5 percent, Limited had an 8 percent drop and teen retailer Pacific Sunwear had a 2.8 percent drop.

Department stores were not so pretty, with Kohl's down 11 percent, J.C. Penney off 7.5 percent and Macy's, down 7.9 percent. Macy's warned January sales could be down 4 to 6 percent. Nordstrom's December was off 3.8 percent.

An early tally from Thomson Financial shows 16 retailers missed projections, seven beat forecasts and one met expectations.

More Billions, Please
Consumers aren't the only ones cash strapped. Citigroup and Merrill Lynch are in discussions to raise additional capital, primarily from foreign governments, says the Wall Street Journal. Both firms just went to the well for capital and both just replaced CEOs who were washed out in the subprime tsunami. Remember, collegaue Jim Cramer told us a few weeks back that the Street will be alright as long as "sugar daddies" from abroad continue to bring in the cash.

Bernanke Speaks
The markets are focused on Fed Chairman Ben Bernanke's 1 p.m. speech on the economy.The New York Times today features a debate that's been raging on Wall Street--is Bernanke tough enough and is his Fed up to the job?

The European Central Bank and Bank of England both left rates unchanged this morning.

Questions? Comments? marketinsider@cnbc.com