Stocks drop after disappointing GE profits
EmptyNEW YORK -- Wall Street fell Friday after a disappointing first-quarter report from General Electric Co. stoked concern about the health of corporate profits and the wider economy. The major indexes lost more than 1%.
A weaker-than-expected consumer confidence reading also weighed on investors.
GE, which is regarded as a bellwether of big business, said its financial-services divisions have been challenged by the slowing U.S. economy and difficult capital markets. The company, whose orbit extends into entertainment, consumer and industrial manufacturing, finance and health care, also lowered projections for the entire year.
The results stirred worries that companies still to report first-quarter results will paint a similarly dreary picture. The smaller-than-expected profits from GE injected anxiety into a market that earlier this week saw disappointing results from the likes of aluminum producer Alcoa Inc. and a warning from chip maker Advanced Micro Devices Inc.
Consumer sentiment fell again in April, adding to recent reports showing Americans' confidence in the economy at new lows, dragged down by worries about mounting job losses, record-high home foreclosures and zooming energy prices.
Investors fear nervous consumers will pare their spending -- an unwelcome prospect as consumer spending accounts for about 70% of economic activity.
"The market is really is focusing on the extent to which problems in the credit markets are spilling over into the real economy," said Brian Gendreau, investment strategist for ING Investment Management.
In late morning trading, the Dow Jones industrial average fell 158.20, or 1.26%, to 12,423.78. GE was by far the steepest decliner among the 30 stocks that comprise the Dow. The stock was off $4.22, or 11.5%, at $32.53.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 16.07, or 1.18%, to 1,344.48, and the Nasdaq composite index fell 32.77, or 1.39%, to 2,318.93.
Bond prices jumped as stocks declined and investors took up defensive positions in government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.45% from 3.55% late Thursday.
Light, sweet crude fell 77 cents to $109.34 on the New York Mercantile Exchange. Gold prices fell, while the dollar was mixed against other major currencies.
The preliminary Reuters/University of Michigan index of consumer sentiment fell to 63.2 for April from 69.5 in March. Investors had expected a reading of 68, according to a consensus estimate of Wall Street economists surveyed by Thomson/IFR.
In corporate news, Frontier Airlines Holdings Inc. filed for Chapter 11 bankruptcy protection. But unlike other airlines filing for bankruptcy recently, it plans to keep operating while it reorganizes. The carrier fell $1.15, or 73%, to 42 cents.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange, where volume came to 407.8 million shares.
The Russell 2000 index of smaller companies fell 9.50, or 1.34%, to 698.19.
Overseas, Japan's Nikkei stock average rose 2.92%. Britain's FTSE 100 fell 1.20%, Germany's DAX index fell 1.34%, and France's CAC-40 declined 1.73%.