(Updates to early morning)
By Jennifer Coogan
NEW YORK, April 11 (Reuters) - U.S. stocks fell sharply on
Friday after General Electric Co <GE.N> lowered its 2008
earnings forecast and data showed consumer sentiment falling to
its lowest since 1982.
Stocks tumbled 1 percent within minutes of the market's
opening as the GE news added to worries about a U.S. recession.
Shortly after the opening, a Reuters/University of Michigan
report showed consumer confidence plunging, hurting the outlook
for consumer spending. For details, see [].
Shares of GE slumped nearly 12 percent, their worst decline
since the market crash in October 1987. The conglomerate, which
is viewed as an economic bellwether because of range of
businesses, reported an unexpected 6 percent decline in
earnings as well as lowering its forecast. [].
The company's financial, industrial and health-care
segments all showed weakness, but the sharpest profit decline
came in its financial services arm.
"One of the themes we'll hear this earnings season is how
bad within financials it was in the last few weeks. That's what
GE highlighted," said Owen Fitzpatrick, head of U.S. Equity
Group at Deutsche Bank Private Wealth Management in New York.
"And the weakening U.S. economy is another theme we'll hear. We
probably need to see estimates come down further, especially in
the back half of year."
The Dow Jones industrial average <> was down 163.25
points, or 1.30 percent, at 12,418.73. The Standard & Poor's
500 Index <.SPX> was down 15.39 points, or 1.13 percent, at
1,345.16. The Nasdaq Composite Index <> was down 32.19
points, or 1.37 percent, at 2,319.51.
Shares of GE fell 11.6 percent at $32.50.
Goldman Sachs and Credit Suisse both cut their rating on GE
shares to "neutral" following the earnings report. Goldman said
the sizable earnings miss raises credibility concerns about the
company.
Other recent gloomy earnings from U.S. companies have
contributed to fears the economy is heading for or is already
in a recession.
United Parcel Service Inc <UPS.N>, the world's largest
package delivery company, forecast weak first-quarter earnings.
Aluminum producer Alcoa Inc <AA.N> said its quarterly profit
was cut in half due to higher energy costs and a weak dollar.
Advanced Micro Devices <AMD.N> gave a revenue estimate below
expectations and said it would cut its work force.
On the positive side, nuts and bolts distributor Fastenal
Co <FAST.O> reported better-than-expected quarterly profit,
sending its shares up 5 percent to $50.22 on the Nasdaq.
In the airline industry, low-cost carrier Frontier Airlines
Holdings Inc <FRNT.O> filed for bankruptcy, citing unexpected
problems with its principal credit card processor. Frontier
shares fell 75 percent to 39 cents.
Consumer confidence fell to its lowest since 1982,
according to the preliminary April reading of the
Reuters/University of Michigan Surveys of Consumers.
Monthly sales results from retail chains released on
Thursday suggested that shoppers are wary of recession and have
cut back on their discretionary spending.
(Editing by Kenneth Barry)
