Friday morning headlines

Stocks tumble: Weak bank earnings and a possible credit downgrade in Europe is keeping market in the red. Dow is down about 100 points.

Banks profits dip: JPMorgan Chase reported a 23 percent drop in fourth-quarter earnings, about what analysts were expecting. Soft results at the company's investment bank are a big reason for the drop. (NYT)

B of A may retrench: That includes selling branches and even pulling out of some regions of the country, though no move is imminent. From the WSJ:

Over the course of its long expansion, Bank of America, currently the country's second-largest bank by assets, pushed its way into every nook and cranny of the financial system. But in doing so the bank left itself more exposed than any major bank to the severe economic downturn of 2008-2009, the weak recovery since and a litany of mortgage-related lawsuits.

Consumer sentiment on the rise: The preliminary January index from Reuters and the University of Michigan is at 74.0, up from 69.9 in December and the highest level in eight months. (Reuters)

S&P expected to downgrade Europe: Several countries will be hit after the U.S. markets close, sources tell Reuters, but not Germany. A downgrade could automatically require some investment funds to sell bonds of affected states and create still more credit problems.

Bids for American?: Delta, US Airways and a private equity firm are interested in the airline, now in Chapter 11, reports the WSJ.

A deal for the carrier would represent perhaps the last major move in a wave of airline consolidation that has slashed the number of major national carriers to five from roughly triple that number two decades ago. But any such deal could also bring sizable complications, and would likely draw close antitrust scrutiny from the government.

L.A. gas update: Average gallon of regular is $3.732, up 3.4 cents from last week, according to the Auto Club.

CBS wants Letterman extension: The network is negotiating with the late-night host, and a two-year deal said to be imminent. That would push him over the 30-year mark. (NYT)

Council considers marijuana ban: That would be a complete ban, at least until the legal questions connected with the sale of medical marijuana get resolved. Pot advocates are trying to fight it. (LA Weekly)