Last Friday, it looked like this week would be an ugly one. Standard & Poor's had just downgraded the credit ratings of France and a number of other European countries, an act that many saw as simply the latest domino to fall in Europe's slow-motion economic train wreck.
But at least in the U.S., the stock market shrugged off that news. After rising as much as 150 points earlier in the session, the Dow Jones Industrials (^DJI) was still up 59 points to 12,481. The Nasdaq Composite (^IXIC) jumped about 17 points to 2,728, while the S&P 500 (^GSPC) rose a more modest 4 points to 1,293.
About three stocks in the Dow rose for every loser, with United Technologies (UTX) and Merck (MRK) among the biggest gainers in the average. Positive economic news from China suggested that the emerging nation might be able to sustain its growth longer than many had expected, helping prospects for United Technologies and other industrial manufacturing stocks within the Dow. Meanwhile, Merck continued its strong run over the past several months, with the shares jumping almost 30% since the beginning of August as investors apparently got more comfortable with the looming patent cliffs that most big drug companies face.
On the other hand, bank stocks got hurt badly. JPMorgan Chase (JPM) fell sharply on the heels of Citigroup's (C) earnings report this morning, in which Citi reported a big drop in profits from levels a year ago.
Despite the fact that the eurozone is still holding itself together for now, continuing stresses weigh not only on the European financial system but on banks around the world as well. Any resolution to sovereign debt problems on the Continent could create a big rally for bank stocks both in the U.S. and elsewhere.
Motley Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. You can follow him on Twitter here. The Motley Fool owns shares of Citigroup and JPMorgan Chase.