U.S. Stocks Plunge On General Electric Shock

NEW YORK (MarketWatch) -- U.S. stocks retreated to April lows on Friday after industrial bellwether General Electric Co.'s earnings miss jolted investors and cast a gloomy light on upcoming profit reports.

"It's a huge miss. It sets a very bad tone for the rest of earnings season," said Philippe Gijsels, senior equity strategist at Fortis.

The Dow Jones Industrial Average shed 164.88 points to 12,417.1, with 25 of its 30 components trading in the red.

General Electric fronted the blue chips' losses, its shares suffering their worst one-day percentage drop since October 1987. The shares were recently off 12%.

The industry bellwether reported a 6% decline in first-quarter net profit, largely over trouble in its financial-services businesses. .

"The lowering of industrial firms' 2008 expectations is in line with the credit troubles we have seen over the last six to eight months, and fuel the debate on how deep a slowdown we might be facing," said David Ader, U.S. government bond strategist at RBS Greenwich Capital.

The S&P 500 fell 17.81 points to 1,342.74, while the Nasdaq Composite suffered the biggest drop, sinking 39.01 points to 2,312.69.

Industrials led S&P sector declines, off 1.5%, followed by information technology, down 1.4%. Only the utility sector advanced, up 0.2%.

Volume on the New York Stock Exchange topped 2 billion shares, with decliners outpacing advancing stocks more than 2 to 1. On the Nasdaq, 1 billion shares were exchanged, and declining issues outnumbered advancers nearly 3 to 1.

Weak dollar fuels import prices

Early economic data did little to offset the market's bearish tone, with the Labor Department reporting that a surge in prices for imported petroleum pushed the price of imports to their biggest monthly percentage increase since November 2007. .

"The surge in import prices is occurring because of weakness in the U.S. dollar and because of worldwide inflation pressures," said Tony Crescenzi, bond market strategist for Miller Tabak & Co.

A later report helped cement the session's bearish tone, with the consumer sentiment index compiled by the University of Michigan/Reuters sliding to its lowest level since March 1982. .

On the New York Mercantile Exchange, crude-oil futures fell, with the benchmark contract down 92 cents to $109.19 a barrel. Gold futures also fell, down $6.3 to $922 an ounce.

The dollar extended losses against the yen, losing ground against the euro as well. The dollar index was at 71.93, down from 72.148 in late North American trading Thursday.

European shares weakened as General Electric's earnings raised concerns for the health of its rivals overseas. .

U.S. stocks finished Thursday with gains, as a broker's upgrade of several microchip stocks including Intel Corp. as well as an improved earnings forecast from Wal-Mart Stores helped set a positive tone. The Dow industrials ended up 54 points, the tech-heavy Nasdaq Composite rose 29 points and the S&P 500 added 6 points.

The fact that the Dow was up more than 120 points during Thursday's session only to lose most of its momentum by the close is "a telling sign that the market is currently lacking any type of follow-through or conviction," said Robert Pavlik, chief investment officer with Oaktree Asset Management.


By Kate Gibson