Monday’s Mid-Day Movers: 3 Stories Driving Markets

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The U.S. equity markets were fighting for fractional gains in early-afternoon trading on Monday. A slight slowdown in Chinese industrial production and retail sales data that came in below expectations seems to have given some investors an excuse to take a break after last week’s record highs.

At 12:35 p.m.: DJIA: +0.18%, S&P 500: +0.13%, NASDAQ: -0.03%.

Here are three stories moving markets on Monday afternoon:

1) “The current Outlook is Negative,” reported ratings agency Fitch at the end of last week. “The inconclusive results of the Italian parliamentary elections on 24-25 February make it unlikely that a stable new government can be formed in the next few weeks. The increased political uncertainty and non-conducive backdrop for further structural reform measures constitute a further adverse shock to the real economy amidst the deep recession.”

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This was part of the justification for the firm’s decision to downgrade the credit rating on Italy’s sovereign debt from A- to BBB+, which is still investment grade. The news, however, helped drive European stocks lower on Monday. The firm commented:

“Q412 data confirms that the ongoing recession in Italy is one of the deepest in Europe. The unfavourable starting position and some recent developments, like the unexpected fall in employment and persistently weak sentiment indicators, increase the risk of a more protracted and deeper recession than previously expected. Fitch expects a GDP contraction of 1.8% in 2013, due largely to the carry-over from the 2.4% contraction in 2012.”

This news comes after a recent report showed that GDP contracted 0.9 percent month over month in the fourth quarter, in line with expectations, and contracted 2.8 percent year over year, 0.1 points below expectations.

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