(Updates to midafternoon)
By Chelsea Emery
NEW YORK, Sept 27 (Reuters) - Stocks slid into negative territory in midafternoon on Friday on worries about sagging corporate profits after sour calls on General Electric Co. and after cigarette maker Philip Morris Cos. Inc. slashed its profit outlook.
"There are disasters on a bunch of Dow stocks," said Josh Rothe, a trader for SKBA Capital Management, which oversees $300 million. "GE is not just an industrial company, it's also in finance. It says a lot about the strength of the economy in general."
The Dow Jones industrial average was down 183.11 points, or 2.29 percent, at 7,814.01. The broader Standard & Poor's 500 Index was down 16.06 points, or 1.88 percent, at 838.89. The technology-laced Nasdaq Composite Index was down 2.7 points, or 0.22 percent, at 1,218.91.
The Nasdaq swung between gains and losses as the last day of the third quarter approaches. Money managers often dress up their portfolios by dropping the quarter's losers and adding winners. This so-called window dressing can cause dramatic swings in market gauges.
For the week so far, the Dow is down 2 percent, the S&P 500 has dropped 0.7 percent and the Nasdaq has slid into negative territory, down 0.2 percent. The market has already suffered four straight weeks of declines.
"We still have earnings problems, economic growth problems and international problems -- and until those get straightened out the market is not going to do anything," said James Volk, managing director of equity trading at D.A. Davidson and Co.
GE sagged $1.80, or 6.9 percent, to $24.58 after Lehman Brothers and Credit Suisse First Boston cut ratings and estimates on the conglomerate a day after it held a conference call with analysts. The two investment banks said a recovery in such "short-cycle" businesses as its plastics unit seems to have stalled and its finance unit is under pressure.
Philip Morris sank $4.37, or more than 10 percent, to $38.36, making it the biggest percentage decliner on the New York Stock Exchange. The company slashed its full-year outlook, saying consumers have turned to deep-discount rivals even after heavy promotions of its premium-priced brands.
SBC fell $1.50, or more than 7 percent, to $20.30. The company said it will cut 11,000 jobs, or about 6 percent of its work force, and slash capital spending to offset pressures from the weak economy, competition and regulations.
Drugmaker Wyeth sank $5.86, or more than 15 percent, to $32.59. The company warned earnings for the year will fall short of expectations, as sales of its flagship hormone replacement products slowed after prominent medical journal articles questioned the safety of the drugs.
Delta Air Lines Inc. , the No. 3 U.S. airline, plunged $2.20, or more than 19 percent, to $9.30. The company warned of weaker-than-expected results for the third quarter and said it has altered the terms of its line of credit because it will not be able to meet the minimum requirements.
The latest economic reports offered a mixed picture of the U.S. economy. The University of Michigan's final September consumer sentiment index slipped to 86.1 from 87.6, its lowest reading since November amid job market and talk of war.
Still, the government raised an earlier reading of the pace of economic growth for the second quarter. Gross domestic product, the broadest measure of the economy's health, rose at an annual rate of 1.3 percent in the second quarter, the Commerce Department said, revised up from the 1.1 percent pace estimated a month earlier.