8:31 am : US Stocks fall sharply following GE results

NEW YORK (AP) - Wall Street stumbled Friday after a disappointingfirst-quarter report from General Electric Co. surprised the market and stokedconcern about the health of both corporate profits and the wider economy. Themajor indexes fell more than 2 percent, with the Dow Jones industrials giving upmore than 250 points. A weaker-than-expected reading showing consumer confidence at a 26-year lowsubdued any positive sentiment. GE, which is regarded as a bellwether of big business, said itsfinancial-services divisions have been challenged by the slowing U.S. economyand difficult capital markets. The company, whose orbit extends intoentertainment, consumer and industrial manufacturing, finance and health care,also lowered its projections for the entire year. The conglomerate is one of the early companies to post first-quarter resultsand its shortfall stirred worries that others still to report will paint asimilarly dreary picture. The smaller-than-expected profits from GE injectedanxiety into a market that earlier this week saw disappointing results fromaluminum producer Alcoa Inc. and a warning from chip maker Advanced MicroDevices Inc. "The market really is focusing on the extent to which problems in the creditmarkets are spilling over into the real economy," said Brian Gendreau,investment strategist for ING Investment Management in New York. According to preliminary calculations, the Dow fell 256.56, or 2.04 percent,to 12,325.42. GE was by far the steepest decliner among the 30 stocks thatcomprise the Dow. Its shares dropped $4.70, or 13 percent, to $32.05. Broader stock indicators also registered sizable losses. The Standard &Poor's 500 index fell 27.72, or 2.04 percent, to 1,332.83, and the Nasdaqcomposite 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, to688.16. Declining issues outnumbered advancers by about 4 to 1 on the New York StockExchange, where volume came to 1.26 billion shares compared with 1.28 billionshares traded Thursday. Friday's pullback followed a comparatively quiet week in which the majorindexes showed modest adjustments. Stocks were little changed Monday, declinedTuesday following profit warnings from names like United Parcel Service Inc. andposted moderate gains Thursday following a drop in unemployment claims. For the week, the Dow lost 2.3 percent, the S&P 500 declined 2.7 percent andthe technology-heavy Nasdaq gave up 3.4 percent. Bond prices rose Friday as investors fearful of a slowing economy took updefensive positions in government debt. The yield on the benchmark 10-yearTreasury note, which moves opposite its price, fell to 3.46 percent from 3.55percent late Thursday. Light, sweet crude rose 3 cents to settle at $110.14 per barrel on the NewYork Mercantile Exchange. The dollar was mixed against other major currencies,while gold prices fell. A snapshot of a gloomy consumer added to recent reports showing Americans'confidence in the economy at new lows, dragged down by worries about mountingjob losses, record-high home foreclosures and zooming energy prices. Investors fear that nervous shoppers will be less willing to reach intotheir wallets -- an unwelcome prospect as consumer spending accounts for about70 percent of U.S. economic activity. The preliminary Reuters/University of Michigan index of consumer sentimentfell 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, onaverage, expected a reading of 68. "I think rationality is coming into the market," said Alan Lancz, directorat investment research group LanczGlobal in Toledo, Ohio. "Every time we move upto test the upper end of the range, something seems to happen." He noted that even if the most onerous times for the financial sector havepassed, as some market watchers have said, the effects of a tight credit marketwill be felt for some time. Lancz said GE's results offer new evidence thatforecasts for corporate profits in general remain too rosy given the troubleshitting businesses. "They're facing a lot of headwinds that I don't think a lot of analysts haveput into their numbers," he said. Lancz contends that the Federal Reserve's moves last month to head off thecollapse of Bear Stearns Cos. no doubt helped stabilize Wall Street -- but mighthave led some investors to become complacent about the scope of the troublesstill facing the economy. Linda Duessel, a market strategist at Federated Investors in Pittsburgh,noted that GE is known for its dependability in meeting Wall Street's forecasts,and the nearly 6 percent drop in its profits suggest that other first-quarterresults next week could reveal weakness well beyond the financial industry. "In the fourth quarter of last year the financials continued to tell us badnews and the rest of the sectors hung in extremely well," she said, adding thatinvestors are now worried the weakness has spread. "That company is known for being kind of a window to the market and theeconomy," she said of GE. In other corporate news, Frontier Airlines Holdings Inc. filed for Chapter11 bankruptcy protection. Unlike the three other airlines that have filed forbankruptcy in as many weeks, the carrier plans to keep operating while itreorganizes. Frontier ended down $1.09, or 69 percent, at 48 cents. Overseas, Japan's Nikkei stock average rose 2.92 percent. Britain's FTSE 100closed down 1.17 percent, Germany's DAX index fell 1.50 percent, and France'sCAC-40 finished off 1.27 percent. Copyright 2008 Associated Press. All rights reserved. This material may not be