Monday was an ugly day on Wall Street, with growth stocks leading the market down as worries about the global economy continue to dominate investor thinking. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) closed near lows for the session.
Technology stocks were hit hard, with the Technology Select Sector SPDR ETF (NYSEMKT:XLK) tumbling 3.5% and the iShares PHLX Semiconductor ETF (NASDAQ:SOXX) closing down 4.5%.
As for individual stocks, General Electric (NYSE:GE) fell after the company’s new CEO made a comment that concerned investors, and Pacific Gas & Electric (NYSE:PCG) crashed in reaction to a catastrophic fire in California.
GE investors find something else to worry about
Shares of General Electric took another leg down, falling 6.9% to a low not seen since 2009, after an interview by CEO Larry Culp stirred concern that there is still bad news to come for the company’s struggling power unit. Culp, who has been in the position for less than two months, attempted to soothe investors by acknowledging the fact that GE has too much debt and emphasizing the strengths of its aviation and healthcare businesses. But when asked if the power segment has hit bottom, he said, “We’re getting close.” Evidently, that was enough to revive selling of the stock.
Culp rightly pointed out that the last earnings report dealt a lot of pain to its shareholders, with the cut in the quarterly dividend to a token $0.01 sending retail investors to the exits and the suspension of guidance turning off institutional investors as well. Any hint of new trouble is hurting the stock, but at this point, impatient investors may be ignoring the potential for good news to emerge after the chief executive actually has had time to start making changes.
PG&E scorched again by fire liability concerns
Shares of Pacific Gas & Electric plunged today, falling 17.4% in response to investor worries regarding potential liability for the disastrous Camp Fire in Northern California. Triggering the decline was news that the company had a problem with one of its transmission lines near the origin of the fire less than 20 minutes before the fire was reported.
In a terse filing with the California Public Utilities Commission, PG&E said that it experienced an outage in a high-voltage transmission line at 6:15 a.m. on Thursday, and that aerial observations later that day revealed damage to a tower. The company’s stock had already plummeted 16% on Friday due to concerns about fire liability, and the news today seemed to strengthen the possibility that the company could have billions of dollars of new liabilities from the destructive fire, which could end up being the deadliest in modern California history.
