GE's weak earnings send stocks plunging

NEW YORK - Wall Street stumbled yesterday after a disappointing first-quarter report from General Electric Co. surprised the market and stoked concern about the health of corporate profits and the wider economy. The major indexes fell more than 2 percent, with the Dow Jones industrials giving up more than 250 points.

A weaker-than-expected reading showing consumer confidence at a 26-year low subdued any positive sentiment.

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 includes entertainment, manufacturing and health care, also lowered its projections for the entire year.

The conglomerate is one of the early companies to post first-quarter results, and its shortfall stirred worries that others would paint a similarly dreary picture. The market earlier this week saw disappointing results from aluminum producer Alcoa Inc. and a warning from chip-maker Advanced Micro Devices Inc.

The Dow fell 256.56, or 2.04 percent, to 12,325.42. GE was by far the steepest decliner among the 30 stocks that make up the Dow. Its shares dropped $4.70, or nearly 13 percent, to $32.05.

The Standard & Poor's 500 index fell 27.72, or 2.04 percent, to 1,332.83, and the Nasdaq composite index fell 61.46, or 2.6 percent, to 2,290.24.

The Russell 2000 index of smaller companies fell 19.26, or 2.72 percent, to 688.16.

For the week, the Dow lost 2.3 percent, the S&P 500 declined 2.7 percent and the technology-heavy Nasdaq gave up 3.4 percent.

A snapshot of a gloomy consumer added to recent reports showing Americans' confidence in the economy at new lows, dragged down by worries about job losses, home foreclosures and energy prices.

Investors fear that nervous shoppers will be less willing to spend - an unwelcome prospect, since consumer spending accounts for about 70 percent of U.S. economic activity.

The preliminary Reuters/University of Michigan index of consumer sentiment fell to 63.2 for April - its lowest point since 1982 - from 69.5 in March, according to Dow Jones Newswires. Economists polled by Thomson/IFR had, on average, expected a reading of 68.

Linda Duessel, a market strategist at Federated Investors in Pittsburgh, noted that GE was known for its dependability in meeting Wall Street's forecasts. She said the nearly 6 percent drop in its profit suggested that other first-quarter results next week could reveal weakness well beyond the financial sector.

"In the fourth quarter of last year, the financials continued to tell us bad news and the rest of the sectors hung in extremely well," she said, asserting that investors were now worried the weakness had spread.

"That company is known for being kind of a window to the market and the economy," she said of GE.

In other corporate news, Frontier Airlines Holdings Inc. filed for Chapter 11 bankruptcy protection. Unlike the three other airlines that have filed for bankruptcy in as many weeks, the carrier plans to keep operating while it reorganizes. Frontier shares dropped $1.09, or 69 percent, to 48 cents.

Overseas, Japan's Nikkei stock average rose 2.92 percent. Britain's FTSE 100 closed down 1.17 percent, Germany's DAX index fell 1.50 percent, and France's CAC-40 finished off 1.27 percent.