(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 11 (Reuters) - Wall Street stocks skidded
on Friday after disappointing earnings at General Electric Co
jolted investors who had hoped a U.S. slowdown would be mild
and sent them scurrying to the safety of government debt.
The slide pulled European shares down as well, though Asian
markets closed higher before the U.S. news hit.
The dollar fell broadly as GE's results and lowered outlook
for 2008 -- along with a worse-than-expected slide in consumer
confidence -- undermined a view that the worst of a credit
crisis that has battered markets for months might be over.
Oil steadied after an earlier decline as supply concerns
and the weak dollar countered expectations that slowing
economic growth will reduce global demand this year.
GE shares slumped more than 13 percent, their worst decline
since the stock market crash of October 1987. The conglomerate,
viewed as an economic bellwether because of the range of its
businesses, reported an unexpected 6 percent decline in
first-quarter earnings and lowered its forecast for 2008.
In another sign of a bleak economy, U.S. consumer
confidence in early April fell to its lowest since 1982, diving
deeper into recessionary territory on heightened worries over
inflation and jobs, according to the Reuters/University of
Michigan Surveys of Consumers.
Euro zone government bond futures staged their biggest
one-day percentage rise in a month on renewed flight-to-safety
flows and U.S. Treasury debt prices rose sharply after the GE
results and dismal reading of consumer confidence.
"These results confirm that the slowdown is widespread and
beginning to impact (capital expenditures) and longer-cycle
businesses," said Stephen Surpless, senior analyst at Cantor
Fitzgerald in London.
"While the credit crisis might be nearer to the end than
the beginning, according to some, the impact on the real
economy is taking place and is unlikely to abate in 2008," he
said.
Traders now see slightly more than a 50 percent chance that
the Federal Reserve will lower its fed funds target rate by
half a percentage point at the end of April, up from about 40
percent a week ago.
GE's earnings do not bode well for the first week of U.S.
companies releasing their first-quarter results, said Philippe
Gijsels, senior equity strategist at Fortis Bank in Brussels.
"You get earnings that are way below estimates and GE's a
complicated story -- one side of it is financial and the other
side is industrial -- so it's a good benchmark for the U.S.
economy," he said.
The Dow Jones industrial average <> closed down 256.56
points, or 2.04 percent, at 12,325.42. The Standard & Poor's
500 Index <.SPX> fell 27.71 points, or 2.04 percent, to
1,332.84. The Nasdaq Composite Index <> was down 61.46
points, or 2.61 percent, at 2,290.24.
European stocks posted their biggest one-day drop since
mid-March, pulled down by GE's results. Asian markets rose
before the bad news hit.
The FTSEurofirst 300 <> index of top European shares
closed down 1.4 percent at 1,284.71 points, its lowest close
since March 31 and its fourth straight negative session. The
index ended the week with a loss of 2.6 percent.
Industrial stocks in Europe took a beating, with Siemens
losing 3.4 percent, and Rolls-Royce falling 3.2 percent.
"GE's results confirm our view that the (earnings)
consensus is still way too high for 2008 and that forecast
downgrades will continue and dampen the market's recent
enthusiasm," said Romain Boscher, head of equity management at
Groupama Asset Management in Paris.
Japan's Nikkei average <> ended up almost 3 percent,
as chipmakers extended a rally on expectations a slump in the
sector may soon end.
The MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 0.9 percent.
While U.S. Treasury prices rose, the benchmark 10-year
Treasury note's yield remained confined to a near-term range
close to 3.5 percent, having already priced in a strong chance
the U.S. economy is succumbing to recession.
The 10-year note <US10YT=RR> rose 21/32 to yield 3.4732
percent. The 2-year U.S. Treasury note <US2YT=RR> rose 5/32 to
yield 1.758 percent. The 30-year U.S. Treasury bond <US30YT=RR>
rose 30/32 to yield 4.2972 percent.
Bond investors worry that with U.S. inflation at about 4
percent and with global energy and food prices surging,
longer-dated nominal Treasury yields could spike higher.
Late short-covering eroded losses in the New York oil
markets. U.S. crude <CLc1> settled up 3 cents at $110.14 a
barrel, while London Brent crude <LCOc1> rose 55 cents to
$108.75 a barrel.
The dollar fell against a basket of major trading-partner
currencies, with the U.S. Dollar Index <.DXY> down 0.43 percent
at 71.839. The euro <EUR=> rose 0.50 percent to $1.582, and
against the yen, the dollar <JPY=> was down 0.92 percent to
100.89.
U.S. gold futures in New York ended lower as investors
lightened positions in a cautious market ahead of the weekend.
Spot gold for June delivery <GCM8> settled down $4.80 at
$927 an ounce on a deleveraging of funds due to weak stock
markets and news of lower gold imports from India.
(Reporting by Kevin Plumberg, John Parry, Matthew Robinson and
Frank Tang in New York and Atul Prakash in London; Editing by
Dan Grebler)
