Stocks slump on word of GE profit dive
Dow falls 1.1%, along with other major indexes, on word of a rare drop in earnings at General Electric.
NEW YORK — A rare profit drop by General Electric drove the stock market down this morning as investors were taken aback that one of corporate America's most reliable earners had been slammed by the economy and credit crunch.
GE shares plummeted $3.99, or 10.9%, to $32.76 after the company said its first-quarter earnings sank 6%. Its 43-cent-a-share profit was far off the 51 cents that analysts expected.
The Dow Jones industrial average tumbled 142.73, points, or 1.1%, to 12,439.25. The Standard & Poor's 500 fell 1% and the Nasdaq composite index was off 1.3%.
GE suffered weakness across several major divisions, most acutely at its commercial and consumer finance units, which have been hurt by the turmoil reverberating through the credit markets. But earnings also sagged at GE's healthcare and industrial divisions, suggesting that economic weakness also is impinging on the company.
The poor results were especially troubling to investors because GE has a reputation for consistently meeting or slightly exceeding earnings estimates through all types of economic conditions.
Analysts excoriated the company, with a Goldman Sachs analyst proclaiming that the earnings miss raised "credibility concerns."
Stocks also were hurt by a consumer sentiment that that showed confidence dropping to its lowest level in 26 years.
walter.hamilton@latimes.com
