NEW YORK Wall Street stumbled Friday after a disappointing first-quarter report from General Electric Co. surprised the market and stoked concern about the health of both 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 extends into entertainment, 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 results and its shortfall stirred worries that others still to report 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 aluminum producer Alcoa Inc. and a warning from chip maker Advanced Micro Devices Inc.
"The market 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 New York.
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 comprise 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 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.
Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 3.59 billion shares compared with 3.60 billion shares traded Thursday.
Friday's pullback followed a comparatively quiet week in which the major indexes showed modest adjustments. Stocks were little changed Monday, declined Tuesday following profit warnings from names like United Parcel Service Inc. and posted 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 and the technology-heavy Nasdaq gave up 3.4 percent.
Bond prices rose Friday as investors fearful of a slowing economy took up defensive positions in government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.48 percent in late trading from 3.55 percent late Thursday.
Light, sweet crude rose 3 cents to settle at $110.14 per barrel on the New York 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 mounting job losses, record-high home foreclosures and zooming energy prices.
Investors fear that nervous shoppers will be less willing to reach into their wallets an unwelcome prospect as 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.
"I think rationality is coming into the market," said Alan Lancz, director at investment research group LanczGlobal in Toledo, Ohio. "Every time we move up to test the upper end of the range, something seems to happen."
He noted that even if the most onerous times for the financial sector have passed, as some market watchers have said, the effects of a tight credit market will be felt for some time. Lancz said GE's results offer new evidence that forecasts for corporate profits in general remain too rosy given the troubles hitting businesses.
"They're facing a lot of headwinds that I don't think a lot of analysts have put into their numbers," he said.
Lancz contends that the Federal Reserve's moves last month to head off the collapse of Bear Stearns Cos. no doubt helped stabilize Wall Street but might have led some investors to become complacent about the scope of the troubles still 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-quarter results next week could reveal weakness well beyond the financial industry.
"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, adding that investors are now worried the weakness has 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 ended down $1.09, or 69 percent, at 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.
The Dow Jones industrial average ended the week down 284.00, or 2.25 percent, at 12,325.42. The Standard & Poor's 500 index finished down 37.57, or 2.74 percent, at 1,332.83. The Nasdaq composite index ended the week down 80.74, or 3.41 percent, at 2,290.24.
The Russell 2000 index finished the week down 25.57, or 3.58 percent, at 688.16.
The Dow Jones Wilshire 5000 Composite Index a free-float weighted index that measures 5,000 U.S. based companies ended Friday at 13,455.24, down 368.56 points, or 2.67 percent, for the week. A year ago, the index was at 14,593.06.