Four big Wall Street firms -- Merrill Lynch ( MER), J.P. Morgan Chase ( JPM), Morgan Stanley ( MWD) and Goldman Sachs ( GS) -- are in danger of having their credit ratings downgraded a bit by Standard & Poor's, largely due to the impact of the weak economy. S&P, one of the big three credit-rating services, announced Thursday that it had formally put the financial firms on a "credit watch," a process that often leads to a downgrade, says S&P credit analyst Tom Foley. He says a downgrade is the usual outcome of a credit watch process. The midmorning announcement wiped out some early gains for the four stocks. Morgan Stanley and J.P. Morgan were hurt the most by the announcement. In late morning trading, shares of Morgan Stanley were off $1.13 to just under $43 and J.P. Morgan's stock was off 86 cents to $24.28. S&P, in a press release announcing the move, said the downgrades would not be "more than one notch." The four firms have corporate credit ratings ranging from AA- to A1+ -- all well above the point that separate an investment-grade rating from junk bond status. S&P says it is reviewing both the short- and long-term corporate credit ratings for Merrill and Morgan Stanley and just the short-term rating for Goldman Sachs. The credit watch is taking place in an economic environment that could cause some "sustained revenue pressure" for the four Wall Street firms, says S&P. But S&P noted that all four firms continue to be profitable.