NEW YORK (AP) — Stocks fell in morning trading after a rare earnings miss for JPMorgan Chase, the country's largest bank, and as reports swirled that France and other European governments may get their ratings cut soon.

The Dow Jones industrial average fell 123 points to 12,347 as of 1:30 Eastern time. That's a drop of 1 percent. All 30 stocks fell.

JPMorgan Chase & Co. led the Dow lower, losing 3.8 percent. Bank stocks fell broadly. Morgan Stanley and Goldman Sachs Group Inc. dropped 8 percent.

It was the first earnings miss for JPMorgan since the final quarter of 2007, a period in which a credit crunch began taking a toll on financial markets. The thinking is that if JPMorgan, widely considered one of the best managed big banks, had trouble in the fourth quarter of 2011, the rest of the industry may have trouble, too.

"JPMorgan is the gold standard," said Phil Orlando, chief equity strategist at Federated Investors. "So what happens to the banks that aren't quite as strong and aren't quite as well managed."

It's called the "cockroach theory" on trading desks, Orlando said. "You never see just one cockroach. If you see one, you know there's bound to be a lot more."

The euro slipped to its lowest level in 17 months after reports came out that Standard & Poor's may follow through on warnings to cut credit ratings for European governments. The euro dropped 1.3 percent against the dollar to $1.26. Borrowing costs for Italy and Spain, two countries at the center of the region's debt crisis, increased.

The dollar and U.S. Treasury prices rose as investors moved money into lower-risk assets. The yield on the 10-year U.S. Treasury note fell to 1.84 percent from 1.93 percent late Thursday.

Standard & Poor's warned Dec. 5 that 15 countries that use the euro were at risk of getting downgraded, citing higher borrowing costs for top-rated governments and ongoing disagreements among European leaders.

The weakness at JPMorgan opened the season for bank earnings on a sour note. Though a pickup in the stream of U.S. earnings may help steer markets over the coming days, Europe's debt crisis is likely to remain the focus.

In other trading, the Standard & Poor's 500 index fell 14, or 1.1 percent to 1,281. The Nasdaq composite fell 26, or 1 percent, to 2,698.

Even with Friday's fall, the S&P 500 and Nasdaq remain on track to post gains for the second straight week. The Dow is down 0.1 percent for the week.

Among stocks making larger moves than the overall market Friday:

— Diamond Foods Inc., which makes Emerald Nuts, plunged 13 percent after The Wall Street Journal reported that federal prosecutors opened a criminal inquiry into its financial practices. The Journal also reported that two large shareholders have dumped most of their stakes in the company.

— Safeway Inc. rose 1.5 percent. An analyst at Jefferies placed a "buy" rating on the stock on the expectation that the grocery store chain will benefit from an improving job market, especially in California.

— Alpha Natural Resources fell 10 percent, the largest loss in the S&P 500. The coal company bought Massey Energy last year, and the U.S. Department of Justice is considering whether to prosecute those who ran Massey when its Big Branch mine exploded in 2010.