A busy Friday, and several cross currents influencing the markets.
The reports of imminent euro zone downgrades definitely gave everyone pause. Futures dropped, and euro/dollar touched its lows, breaching 1.27 at one point.
But to understand the day's movements, you need to go back to the European bond auctions. That is when the euro began to weaken and stock futures began to slide.
In Italy, the yield and total sold were actually encouraging. In fact, the yield on the three-year note was about 80 basis points lower than just two weeks ago.
However, demand was tepid, and traders are now wondering whether this is the low point on yields. If it is, the question now: With all the debt set to roll over, are these levels low enough? That is THE debate.
JPMorgan Chase reported decent profits, but the $1.5 billion revenue miss has spooked investors, and pretty much the whole sector — which has been an early 2012 darling — sold off.
Don't forget, next week we hear from Citigroup and Wells Fargo on Tuesday, Goldman Sachs Group and Bank of NY Mellon on Wednesday, and Bank of America and Morgan Stanley on Thursday.
Other things we are watching:
Chevron. Oppenheimer came out and said, yes, the fourth quarter might be weak, but the fundamentals remain bullish. Oil is staying high, and the company has cash. The firm reiterated its "buy" rating and raised its price target to $130.
Also, keep an eye on soft drinks and gamers. Dr. Pepper Snapple had a downgrade, and this comes on the heels of Pepsico and Coca-Cola getting downgraded. The Wall Street Journal did interview a board member at Pepsi that was positive on Indra Nooyi. Look for cost-cutting and added investment in product development.
In terms of gaming, keep an eye on Activision Blizzard, GameStop, Electronic Arts, and Take Two Interactive. Video game sales were down in 2011, and December, it was down 20 percent.
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