US STOCKS-GE's poor results, consumer data slam Wall St

(Updates to midday, changes byline)

By Cal Mankowski

NEW YORK, April 11 (Reuters) - U.S. stocks dropped on Friday after General Electric Co's (GE.N: Quote, Profile, Research) disappointing profit forecast cast a shadow on the upcoming earnings season and data showing consumer sentiment at a 26-year low added to recession fears.

Stocks tumbled 1 percent within minutes of the market's opening with shares of GE slumped nearly 12 percent in their worst decline since the market crash in October 1987.

The conglomerate, which is viewed as an economic bellwether because of the range of its businesses, reported an unexpected 6 percent profit drop in the biggest shock yet to American industry from the credit crisis and the latest sign the U.S. economy may be in a recession. For details see [ID:nN11436648]

Adding to investor angst about state the economy, a Reuters/University of Michigan report on U.S. consumer sentiment fell to its lowest in more than a quarter century in early April, diving deeper into recessionary territory on heightened worries over inflation and jobs. [ID:nN11436648]

Hugh Johnson, chief investment officer at Johnson Illington Advisors in Albany, New York, said most of GE's problems were in the financial unit, GE Capital.

"This is more bad news on credit, but it's not creating a race for the exits. Sure, the market's reaction is down but it is contained," said Johnson, whose firm and its clients own GE shares.

The Dow Jones industrial average .DJI fell 179.37 points, or 1.43 percent, to 12,402.61. The Standard & Poor's 500 Index .SPX lost 19.59 points, or 1.44 percent, to 1,340.96. The Nasdaq Composite Index .IXIC declined 42.37 points, or 1.80 percent, to 2,309.33.