Market Recap: GE Downgrade Concerns Drag Dow to Daily Loss

              

Blue-chip earnings continued to steer the market's direction today, as General Electric (GE) stepped into the spotlight. The conglomerate reported a fourth-quarter profit that matched analysts' expectations, but investors honed in on a sharp 67% plunge in GE Capital earnings. CFO Keith Sherin stoked the bearish flames after he said that GE now expects credit losses of $10 billion in 2009, up from a previous estimate of $9 billion. "Overall, we expect both the commercial and the consumer delinquencies to continue to get worse," warned Sherin. The results prompted many analysts to speculate that GE could be stripped of its top-tier AAA credit rating, which sent the shares down 12% at their intraday nadir. While most stocks battled into positive territory in afternoon trading, concerns about GE kept the Dow depressed into the close.

The Dow Jones Industrial Average (DJIA – 8,077.56) battled back from another intraday dip below the 8,000 region, but the blue-chip barometer is slowly losing its grip on this key millennium mark. The Dow ended the day on a loss of 45 points, or 0.6%, but finished the week with a steeper decline of 2.5%. Fourteen of the index's 30 components muscled into the black, led by JPMorgan Chase (JPM). As for the day's slipping blue chips, the shares of GE, Caterpillar (CAT), and United Technologies (UTX) blazed the path lower.

The S&P 500 Index (SPX – 831.95) ended the day with a modest gain of 4.5 points, or 0.5%, but still swallowed a weekly loss of 2.1%. Finally, the Nasdaq Composite (COMP – 1,477.3) led today's equities rebound by adding nearly 12 points, or 0.8%. However, the tech-heavy COMP endured the week's steepest drop of 3.4%, and suffered its first weekly finish below the 1,500 level since Nov. 21, 2008.

Turning to equities in focus, Walt Disney (DIS) announced plans to merge 2 of its ABC divisions ... Geron Corporation (GERN) vaulted to a new annual high after receiving FDA clearance to conduct stem cell trials ... Citigroup weighed in on the credit card sector with notes on MasterCard (MA), Visa (V), and American Express (AXP) ... Suntech Power (STP) rallied after offering stronger-than-expected revenue guidance ... Merck & Co. (MRK) bucked weakness in the broader Dow after an upgrade to "buy" ... and today's Quote of the Day comes from Rod Blagojevich, the recently impeached governor of Illinois. The disgraced politician displayed his flair for the dramatic when he described the day of his arrest to The Associated Press:

"Dec. 9 to my family, to us, to me, is what Pearl Harbor Day was to the United States... And just like the United States prevailed in that, we'll prevail in this."

But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Market Blog coverage of:

• Capital One Financial (COF)
• Harley-Davidson (HOG)
• Comerica (CMA)
• and Xerox (XRX)

And, in case you missed it, today's installment of Schaeffer's Daily Q&A explained the difference between book value and market value. Click here to watch the video.

For today's activity in crude oil, gold futures, options, and more, turn to page 2.

Crude oil was hit with selling pressure early, as traders took their cue from Thursday's larger-than-expected inventory build and this morning's news that Great Britain is now officially in a recession. However, black gold rebounded by the close, with heating oil providing positive momentum to the energy complex. Forecasts calling for a cold snap to smack the Northeast sparked the rally in heating oil, as fuel-switching requirements in the region are expected to prevent some commercial users from using natural gas as a heat source. Buoyed by heating oil's surge and a rebound in the equities market, crude oil for March delivery settled on a gain of $2.80, or 6.4%, at $46.47 per barrel. Oil futures rose 9% this week from last Friday's close.

Persistent anxiety about the global economy proved to be a positive catalyst today for gold futures. The malleable metal enjoyed a surge of safe-haven buying, which sent the front-month contract to an intraday peak of $903.80 per ounce -- its highest price since Oct. 8, 2008. Today's gains came despite the U.S. dollar tapping a 23-year high versus the British pound, and a 6-week peak against the euro. Gold for February delivery ended the day up $37, or 4.3%, at $895.80 per ounce. For the week, gold futures added 7%.

Levels to Watch in Trading:

Dow Jones Industrial Average (DJIA – 8,077.56) - support at 7,500; resistance at 9,000

S&P 500 Index (SPX – 831.95) - support at 750; resistance at 1,000

Nasdaq Composite (COMP – 1,477.3) - support at 1,300; resistance at 1,750