Stock fell sharply Friday as General Electric's earnings miss cast a gloomy haze over earnings season and consumer confidence hit a 26-year low.
General Electric plunged about 12 percent after the conglomerate reported an unexpected 6 percent drop in earnings and missed expectations as the economic slump and credit crunch squeezed profits across the board, though a lot of the problems were concentrated in the financial unit. Goldman Sachs downgraded its rating on GE to "neutral" following the report (GE is the parent of CNBC and CNBC.com.)
GE's decline, in percent terms, was one of its biggest ever. The stock has only fallen more than 10 percent in a day twice -- on Black Monday in 1987 and after the Sept. 11 attacks in 2001.
GE's results "just shows how much this credit crisis is affecting everybody," Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago, told Reuters.
The GE results dragged on industrial and financial stocks, which were down 4 percent and 0.6 percent, according to S&P 500 sector gauges.
Among industrials, uniform manufacturer Cintas , truck maker Paccar and engine maker Cummins were the other biggest decliners.
CIT Group , a GE rival in leasing and financing, fell sharply. Among other notable declines in the financial sector: AIG and Merrill Lynch skidded nearly 2 percent, while Washington Mutual was off about 2.5 percent.
Goldman Sachs said Washington Mutual, the largest U.S. savings and loan, may have to set aside $14 billion this year for credit losses, a statistic that prompted the brokerage to take the rare move of recommending that investors sell short WaMu stock. Analysts are projecting that WaMu won't be profitable until 2010.
Meanwhile, financials will get a global check this week as financial officials from the G7 countries meet in Washington today. They are expected to approve proposals for tightening scrutiny on global-banking practices and pushing the private sector to do moreto keep financial markets in check.
In economic news, consumer sentiment fell to a 26-year low, according to a report from the University of Michigan. The university's consumer-sentiment index came in at 63.2 for its mid-month check, down sharply from 69.5 at the end of March. Economists had expected a reading of 69.
U.S. import prices rose 2.8 percent in March, up sharply from 0.2 percent in February; economists had expected a gain of 2.1 percent. Excluding oil, all other import prices jumped 1.1 percent, the biggest increase on record. Export prices increased 1.5 percent, up from 1.1 percent in February.
"It's not just the global slowdown," Art Cashin, director of floor operations at UBS, told CNBC. "There is some anxiety that the consumer and the economy hit a wall and that it's not slowing, it may have stopped."
Cashin said the one-two punch of GE's results and import prices, which showed the U.S. is importing inflation from China, could stun the market. "We'll have to wait and see how the patient" -- the market -- "holds up," Cashin said. He's looking for the S&P 500 index close above 1350 today, or else it could have negative implications for next week.
Elsewhere on the earnings front, increased demand for cancer drugs helped Genentechbeat analysts' earnings target but sales of all four of its big brand-name drugs, including Avastin, fell short of forecasts.
In today's episode of As the Yahoo Turns, Yahoo executives were said to be meeting to discuss alternatives to a Microsoft -- or now, Microsoft-News Corp. -- bid, the Wall Street Journal reported. Still, many insiders view a Microsoft deal sans News Corp. will be the most likely outcome, according to the paper.
Airlines continue to face troubles, as American Airlines, owned by AMR , canceled another 570 flights Fridayand another low-cost carrier, Frontier Airlines, filed for Chapter 11 bankruptcy protection. But unlike other airlines filing for bankruptcy in recent weeks, Frontier said it plans to keep running while it reorganizes.
Ailing home-goods retailer Linens 'n Things is also expected to file for bankruptcy, the Wall Street Journal reported. Earlier this week, rival Bed Bath & Beyond reported its earnings dropped 16 percent and issued a disappointing outlook as the housing slump continued to take a toll on home-related retailers.
On Tap for Next Week:
MONDAY: Retail sales, business inventories
TUESDAY: J&J, Intel, WaMu earnings; Empire State manufacturing; PPI
WEDNESDAY: Coke, JPMorgan, Wells Fargo, eBay, IBM earnings; mortgage applications; housing starts; CPI; industrial production; crude inventories; Beige Book; Fed's Yellen, Plosser speak
THURSDAY: Merrill Lynch, Nokia, Pfizer, Capital One, Google earnings; jobless claims; Philly Fed report; leading indicators; Fed's Kohn, Fisher speak
FRIDAY: Caterpillar, Citigroup, Honeywell, Xerox earnings; Fed's Lacker, Rosengren speak
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