Why Banks Are Lower

U.S. and European banks are both lower, and with reason:

1) UBS , Credit Suisse and Deutsche Bank have acknowledged they are part of a probe by the U.S. government into whether they misrepresented the risks from mortgage-backed securities. The rating agencies — Standard & Poor's, Moody's Investors Service and Fitch Ratings — have also been subpoened by NY AG Andrew Cuomo, along with Citigroup , Goldman Sachs , Morgan Stanley , and Merrill Lynch (now part of Bank of America ).

2) risks in the Eurozone are still high, and

3) the regulatory reform bill is still taking shape.

With the exception of gold and gold stocks, commodity stocks are down 2-3 percent as energy and base metals weaken with the Euro falling below $1.25 today. While off the lows from earlier this morning, just before 6am ET, the Euro briefly fell below its 2008 low, moving to its lowest levels in over 4 years.


1) Visa and MasterCard each drop 8 percent after the Senate passed a measure that would force credit card companies to charge merchants less for debit card transactions.

It would also give merchants the right to require a minimum purchase before allowing customers to pay via a credit card. It would also allow for discounts to customers paying by methods other than a credit card.

The measure needs approval by the House of Representatives.

2) JCPenney reported earnings inline with expectations, as comps rose 1.3 percent. But like Kohl's yesterday, JCPenney's guidance was very cautious. Q2 guidance of $0.10-$0.13 fell mostly below current estimates of $0.13, while full-year guidance of $1.64 missed the consensus forecast by a penny.

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