“On Friday, we had the bad surprise from [General Electric Co. (GE)],” Ken Tower, chief market strategist at Covered Bridge Tactical, told MarketWatch. “But this week, we’re seeing investors pleasantly surprised that earnings overall are not as bad, supporting the view of a shallow economic decline instead of a more severe one.”

At midday in New York, the blue-chip Dow Jones Industrial Average Index was up 179.37 points (1.45%), to trade at 12,541.84. The tech-laden Nasdaq Composite Index gained 48.43 points (2.12%), to reach 2,334.47. And the broader Standard & Poor’s 500 Index increased 18.68 points (1.40%), to hit 1,353.11.

All sectors were up, with the basic materials sector (up 3.02%) and the technology sector (up 2.55%) posting the largest gains.

Intel Corp. (INTC) shares got a boost from strong first quarter sales results in Asia and Europe. Sales increased 9.3% to $9.67 billion, beating analyst estimates.

“These big market-share multinationals are still benefiting from economic growth outside the U.S.,” Keith Wirtz, Cincinnati-based chief investment officer at Fifth Third Asset Management, told Bloomberg News. “It tells me conditions are not all that bad on a global basis.”

March industrial production also rose slightly for the month with a 0.3% increase.

“The manufacturing sector may not be expanding but it is not contracting either, which is good news,” Joel Naroff, president and chief economist of Naroff Economic Advisors, said in a note to clients today.

In overseas markets, Japan’s Nikkei 225 Index gained 1.2% with an increase of 155.55 points to close at 13,146.13. Hong Kong’s blue-chip Hang Seng Index was relatively flat with a 22.98-point drop, to close at 23,878.35.

The FTSEurofirst 300 index of top European shares gained 1.6%. Other major European bourses were up, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting gains.

At midday, the dollar had lost ground against the euro (down 1.072%), the yen (down 0.010%) and the pound sterling (down 0.785%).

GE’s stock dropped more than 11%, and was trading at $32.50 shortly after noon EDT.

At midday today in New York, all three of the key U.S. stock indices were down by more than 1%.

The blue-chip Dow Jones Industrial Average Index was down 146.31 points (-1.16%), trading at 12,435.67. Of the 30 stocks in the Dow, 26 were down. The tech-laden Nasdaq Composite Index fell do 2,318.89, a drop of 32.81 points, or 1.4%. And the broader Standard & Poor’s 500 Index skidded 15.08 points (-1.11%), to hit 1,345.47.

The S&P is down 2.1% for the week, as this morning’s sell-off extended the worst weekly decline in a month.

The transportation sector (up 0.14%) posted the only gain, while the conglomerates sector that GE is part of had the biggest decline, plunging 5.60%.

“We are seeing the collateral damage to the economy,” Bill Strazzullo, chief market strategist at financial advisory firm Bell Curve Trading, said in an interview with Bloomberg Television. “We saw this with retail sales, consumer confidence, now we are seeing this with the General Electric earnings. When you look at this from the vantage point on the effect of the broader economy, things are getting worse.”

GE – the world’s third-largest company by market value – reported a 6% decline in its first-quarter profit, due mostly to trouble in the financial divisions that are part of its massive GE Capital unit. Net income dropped to $4.3 billion, or 43 cents per share, while revenue increased 8% to $42.24 billion.

According to FactSet Research, the mean analyst expectation for profit from continuing operations was 51 cents per share. GE reported just 44 cents per share, which caused its shares to tumble.

In overseas markets earlier today, Japan’s Nikkei 225 Index surged 378.43 points to close at 13,323.73. Hong Kong’s blue-chip Hang Seng Index had a 480.69-point gain, and closed at 24,667.79.

European bourses were down, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting losses.

At midday, the dollar had gained ground against the yen (up 0.216%), but lost ground against both the euro (down 0.449%) and the pound sterling (down 0.086%).

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 8.72 points (-0.07%), to trade at 12,617.31. The tech-laden Nasdaq Composite Index increased 6.72 points (0.28%), to reach 2,370.02. And the broader Standard & Poor’s 500 Index rose 3.29 points (0.24%), to hit 1,372.60.

The basic materials sector (up 1.68%) and the energy sector (up 1.10%) posted the biggest gains, while the consumer cyclical sector (down 1.01%) and the financial sector (down 0.46%) posted the largest declines.

Payrolls declined for the third straight month as U.S. employers shed 80,000 jobs, more than forecast, the Labor Department announced today (Friday). Unemployment increased in March to 5.1% from 4.8% last month and is now at its highest level since September 2005.

“After three consecutive months of job losses, it is hard to argue that we are not in a recession,” Joel Naroff, president and chief economist of Naroff Economic Advisors said today in a note to clients.

But market response to the news was subdued, as investors seem inclined to wait for first quarter earnings reports.

“The market is reacting well to what two months ago would have been disastrous news, but that may change after next week, when we get news from corporate America and what they think for the rest of the year – we may see some estimate guide-downs,” Art Hogan, chief market strategist at Jefferies & Co., told MarketWatch.

In overseas markets, Japan’s Nikkei Index shed 96.68 points to close at 13,293.22. Hong Kong’s blue-chip Hang Seng Index had a 392.20-point increase, to close at 24,264.63 on Thursday. The Hong Kong markets are closed today (Friday) for the Ching Ming Festival, a public holiday and will reopen on Monday.

European bourses were mostly flat with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting only slight gains.

At midday, the dollar had lost ground against the euro (down 0.540%), the yen (down 0.529%) and the pound sterling (down 0.015%).