Stocks Drop Amid Euro Zone Downgrades

U.S. stocks closed lower Friday after media reports Standard & Poor’s ratings agency was getting ready to downgrade France and other euro-zone countries; a breakdown in Greek debt talks; and a disappointing results from J.P. Morgan Chase & Co. The Dow Jones Industrial Average fell 48.96 points, or 0.39%, to 12,422.06.. The S&P 500 fell 6.41 points, or 0.49%, to 1,289.09. The Nasdaq Composite lost 14.03 points, or 0.51%, to 2,710.67. For the week, the Dow gained 0.5%, the S&P 500 rose 0.9%, and the Nasdaq rose 1.4%.

France’s finance ministry says Standard & Poor’s has cut the country’s credit rating by one notch to AA. France’s loss of its AAA-rating deals a heavy blow to the eurozone’s ability to fight off its debt crisis. The country is the second-largest contributor to the currency union’s bailout fund.

Talks between Greece and its creditor banks to slash the country’s towering debt pile broke down on Friday, with the Greeks warning of “catastrophic” results if a deal to swap bonds is not reached soon.

President Barack Obama on Friday took aim at his government’s own messy bureaucracy, prodding Congress to give him greater power to merge agencies and promising he would start by collapsing six major economic departments into one. Pressing Republicans on one of their own political issues, Obama said it was time for an “effective, lean government.”

The chief executive of Lloyds Banking Group, which was rescued by British taxpayers during the credit crisis, says he won’t take his annual bonus for 2011.

Crude-oil futures fell further under the $100-a-barrel mark on Friday. February futures of light, sweet crude settled lower by 40 cents, or 0.4%, at $98.70 a barrel on the New York Mercantile Exchange.