NEW YORK – Wall Street stumbled yesterday after a disappointing first-quarter report from General Electric Co. surprised the market and stoked concern about the health of 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.
“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 make up the Dow. Its shares dropped $4.70 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, the Nasdaq composite index fell 61.46, or 2.6 percent, to 2,290.24, and 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.
Yesterday's pullback followed a comparatively quiet week in which the major indexes showed modest adjustments. Stocks were little changed Monday, declined Tuesday after profit warnings from names like United Parcel Service Inc. and posted moderate gains Thursday after 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 yesterday 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 3.47 percent from 3.54 percent Thursday.
Light, sweet crude rose 3 cents to settle at $110.14 per barrel on the New York Mercantile Exchange. The dollar was lower against other major currencies, and gold prices fell.
“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.
In corporate news, Longs Drug Stores Corp. rose 70 cents to $38.35. Despite weakness from a mild flu season, demand for Easter seasonal merchandise helped offset weak pharmacy sales and boosted March same-store sales.
PDL BioPharma Inc. rose $1.98 to $13.69. Its biotechnology assets will be spun off into a separate company, and shareholders will receive a special $4.25 dividend.
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.
