In early trading, the market started with a bang, seemingly undeterred by Friday's ratings downgrades across the pond. After four days, that's old news, right?
Not so fast, my friends. The afternoon slump soon arrived, and the caffeine started to wear off. By the closing bell, the Dow Jones Industrials (INDEX: ^DJI) and S&P 500 (INDEX: ^GSPC) had tapered off their enthusiasm but still closed with modest 0.48% and 0.36% gains, respectively. The Nasdaq crept up 0.64% as well, for a finale that should please investors on the whole.
The broader market shook off slower growth in China and the deteriorating situation in Europe, but several stocks still lagged behind.
The banking blues
Notably, banking components JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) were the Dow's biggest losers.
After JPMorgan Chase reported lackluster results in its investment-banking arm last Thursday, many of the large banking stocks have been sliding. Today, that trend continued, with Citigroup joining JPMorgan Chase to post its lowest revenue since the height of the financial crisis in 2008. Citigroup's revenue fell 7% from a year earlier to $17.2 billion, and net income declined 11% to $1.17 billion. As a result, peers JPMorgan Chase and Bank of America tumbled 1.97% and 2.81%, respectively.
Once again, the banks with larger investment-banking segments remain more heavily exposed to uncertainty in the markets. Wells Fargo relies the least on trading among the big six banks and thus reported a record fourth-quarter profit today. Meanwhile, investors wait with bated breath to see what the damage might look like at Goldman Sachs, Morgan Stanley, and Bank of America. All three will have a chance to redeem themselves with earnings announcements later this week.
Pre-earnings jitters
Another downer for the day was GE (NYSE: GE), which dropped 0.53%. GE's stock has been on a tear over the past six weeks, however, climbing more than 17% since the beginning of December. The market seems poised to receive solid numbers when the industrial giant reports on Friday.
All told, the market is continuing a positive trend today, even as the largest banks weighed on the Dow index. While investment-banking woes could continue, more traditional banks such as Wells Fargo and regional banks should prove resilient. Sometimes it pays to stick with the tried-and-true commercial-banking model. For insight into a solid regional bank even Warren Buffett would find intriguing, check out our recent Motley Fool Report, "The Stocks Only the Smartest Investors Are Buying."
