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Market Recap: GE Drops the Bulls


Few stocks survived today's beating.

Bellwether General Electric (GE) set a negative tone for the trading session. The Dow Industrial fell -256 points, or -2.04% to 12329, the S&P 500 lost 27 points, or -2.04% to 1332, and the Nasdaq Composite dropped -61 points, or -2.61% to 2290.

Stocks tanked on the opening after GE reported earnings for the first quarter. The manufacturing conglomerate said profits came in at $0.44 per share, $0.07 worse than consensus estimates of $0.51. Revenues rose 7.8% on a year-over-year basis to $42.24 bln vs. $43.68 bln consensus. The company also issued downside guidance for 2Q with EPS in the range of $0.53-0.55 per share vs. estimates of $0.58. While demand for the global infrastructure business was strong, the primary shortfall was due to a decline in financial services earnings. Further extraordinary disruptions in the capital markets in March affected the company's ability to sell assets and resulted in higher mark-to-market losses and impairment. Shares of GE plummeted -12.79% to $32.05. See Minyanville Editor Andrew Jeffery's column Financial Services Drag Down GE.

Although the market seemed blindsided by the GE news, Professor Jeffrey Cooper didn't seem too surprised. "…Why is the market so stunned by GE's report? After all it's a large financial as well as industrial. An unprecedented disappointment? Hey, this whole financial crisis has been more than a bump in a road. Who in the financials has been immune? Where was the negative guidance? Apparently the "miss" just snuck up on the conglomerate. To quote GE, "It is what it is."

For another perspective, read Toddo's Clues To the Fuse.

Few stocks withstood today's beating. On the Big Board and Nasdaq, the decliners outpaced the advancers 4 to 1. Notable decliners in the tech space include Apple (AAPL) -4.75% to $147.17. Research in Motion (RIMM) fell -3.6% to $116.29, Google (GOOG) dropped -2.38% to $457.70. See Toddo's Freaky Friday Potpourri.

Professor Jon Markman spoke of another space affected by the financials, the aircraft lessors: "AirCastle (AYR), AerCap (AER), and Babcock & Brown (FLY). They buy planes on credit and then they repackage those leases as asset-backed securities. To the extent that no one is buying the ABS's, their business is NOT GOOD. It's like running an ice cream truck but all your popsicles have melted. The really don't have anything to sell. They still have a truck but the inventory is a big sloppy mess.

If GE and Lehman (LEH) are saying they can't sell ABS, how is anyone else going to be able to. "

AYR closed -3.8% to $13.36, AER fell -7.06% to $18.29, and FLY hit a new 52 week low to settle -5.65% to $13.38.

In commodities, crude oil gained +0.18 to 110.29. Gold finished -4.70 to 923.60. Silver lost -0.278 to 17.765, and copper gained +2.05 to 397.45.

The dollar index closed -0.324 to 71.793.

For more Buzz insight, check out Minyanville's Buzz Bits.

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: SPX, QQQQ, GS, FDRY, GOOG, GS, RIMM, GEX, WB, ANF, WMT, COST, HD, XLF, IYT, NBIX, RIMM, AAPL, CCJ, GEF, FFIV, PG, WB, DNA

Some bearish trade or investment ideas: GE, MAN, CTCM, AER, AYR, FLY

Be safe, Minyans! Have a great weekend!
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No positions in stocks mentioned.

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