-- U.S. stocks fell the most in five weeks after General Electric Co. said the credit-market crisis caused an unexpected earnings decline, while slowing economic growth and rising energy prices eroded profit at United Parcel Service Inc. and Alcoa Inc.
GE posted the steepest weekly loss since the September 2001 terrorist attacks after cutting a profit forecast that Chief Executive Officer Jeffrey Immelt repeated a month ago. GE's plunge erased $55 billion from its stock-market value. UPS, the world's largest package-delivery company, and Alcoa, the third- biggest aluminum producer, retreated after first-quarter earnings fell short of estimates.
The Standard & Poor's 500 Index lost 2.7 percent to 1,332.83 this week, putting the measure 15 percent below its October record high. The Dow Jones Industrial Average declined 2.3 percent to 12,325.42. The Russell 2000 Index of small-cap companies slumped 3.6 percent to 688.16.
GE's ``key news was the slowdown they saw in orders and business activity in the last two weeks of March,'' said Joseph Veranth, Brookfield, Wisconsin-based chief investment officer at Dana Investment Advisors, which manages $2.8 billion. Its results show ``there was a marked slowdown in economic activity.''
The report from GE capped the first week of an earnings season projected to mark the third straight quarter of declining profits. Analysts reduced estimates for the 14th straight week on concern fallout from the U.S. housing slump will spread beyond financial companies. Earnings at companies in the S&P 500 are forecast to fall an average of 12.3 percent in the first quarter and 3.8 percent in the second, according to estimates compiled by Bloomberg.
`Different World'
GE, the world's biggest maker of power-plant turbines and jet engines, fell 15 percent to $32.05 this week. Immelt yesterday said the Federal Reserve's March 14 move to help rescue Bear Stearns Cos. created a ``different world in financial services'' that prevented GE from selling some assets. The company wrote down the value of loans and Chinese securities.
``There's still a lot of uncertainty,'' said Michael Strauss, who helps manage $43 billion at Commonfund in Wilton, Connecticut, including GE shares. ``The question mark for GE is `Is this a byproduct of something unfolding in the financial side, or something beyond the financial side?' Earnings will have some challenges.''
UPS fell 4.7 percent to $70.89. The company said first- quarter profit was as little as 86 cents a share, compared with a prior estimate of 94 cents to 98 cents, as fuel costs rose and a sagging economy weighed on premium-priced air shipments to consumers.
Recession Predictions
The U.S. is, or will soon be, in a recession, according to the majority of economists surveyed by Bloomberg News from April 2 to April 8. Higher gasoline prices and the deteriorating labor market sent confidence among U.S. consumers to a 26-year low in April, according to the Reuters/University of Michigan index.
Alcoa fell 9.9 percent to $35.15. The first company in the Dow average to report first-quarter results said it earned 44 cents a share excluding some items, missing the 50-cent average analyst estimate. Profit more than halved on surging energy costs, lower metals prices and a slumping U.S. dollar.
CIT Group Inc. fell 20 percent to $11.79. JPMorgan Chase & Co. analyst George Sacco cut his 2008 earnings estimate for the commercial finance company trying to escape a cash squeeze by 56 percent.
`Increase Rapidly'
Fannie Mae and Freddie Mac, U.S. government chartered companies that own or guarantee almost half the U.S. residential mortgage debt outstanding, fell after Goldman Sachs Group Inc. predicted their credit losses will ``increase rapidly.'' Fannie Mae fell 14 percent to $26.04. Freddie Mac fell 15 percent to $23.49.
Garmin Ltd. fell 17 percent to $44.83. The world's second- largest maker of car-navigation equipment tumbled after bigger rival TomTom NV trimmed its sales outlook for the year.
The Chicago Board Options Exchange Volatility Index, the benchmark for U.S. stock option prices, rose 4.5 percent to 23.46. The so-called VIX gauges the cost of insuring against declines in the S&P 500. The measure reached 21.21, the lowest intraday level since Dec. 28, on April 7.
Wyeth rose 8.3 percent to $45.02 for the biggest gain in the S&P 500. The drugmaker's medication for Alzheimer's disease may help raise the stock by 50 percent in the next year, Barron's reported, citing health-care investor Larry Feinberg.
$7 Billion
Washington Mutual Inc. climbed 7.7 percent to $10.95. The largest U.S. savings and loan got $7 billion from a group led by David Bonderman's TPG Inc. after losses on subprime loans ate up capital and erased about three quarters of its market value.
Energy was the only industry out of 10 in the S&P 500 that gained as crude oil and gasoline futures rose to records and natural gas climbed for the eighth time in 10 weeks. Companies including Apache Corp., Devon Energy Corp. and Halliburton Co. reached all-time highs.
Nine of 30 companies in the Dow are scheduled to report quarterly results next week: Caterpillar Inc., Citigroup Inc., Coca-Cola Co., Intel Corp., International Business Machines Corp., Johnson & Johnson, JPMorgan Chase & Co., Pfizer Inc. and United Technologies Corp.
Other companies slated to report include Abbott Laboratories, Capital One Financial Corp., EBay Inc., Google Inc., Honeywell International Inc., Merrill Lynch & Co., Schlumberger Ltd. and Wells Fargo & Co.
U.S. retail sales were unchanged in March after falling 0.6 percent in February, economists predicted in a Bloomberg survey before the Commerce Department's April 14 report.
Yields on Treasuries declined as traders increased bets on a bigger Federal Reserve interest-rate cut. For two-year notes, which are more sensitive to Fed moves than longer-term debt, yields dropped to 1.75 percent from 1.82 percent. The odds of a half-point cut at the central bank's next meeting on April 30 increased to 46 percent from 42 percent, interest-rate futures show. Odds of a quarter-point cut to 2 percent fell to 54 percent.
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