How big is the $700 billion financial bailout package for the markets? Big enough that a change in perception as to whether it will pass can overshadow a cut in outlook from industrial and financial powerhouse General Electric.
 
Initially down after GE slashed its quarterly and full-year forecast, Dow Jones futures turned higher in later pre-market trade on optimism that the bailout will go ahead with only minimal friction in Congress. GE CEO Jeffrey Immelt said persistent woes in its finance arms, which account for half of its business, were to blame for the dimmed outlook. 
 
GE stunned Wall Street in April with an unexpected drop in first-quarter profit. It blamed the global credit crunch and the collapse of Bear Stearns for pushing its finance arms lower. These are the businesses at the root of the outlook problems now. At least the market is getting some warning this time — in the spring, GE sprung the bad news on investors in its results statement.
 
GE shares were down early, sagging to $23.50, off more than $1 from Wednesday’s close. If they hit $20.25 they will have lost half of their value since Immelt became CEO. 
 
Given the size and breadth of its financial biz, it would be no surprise to see GE in line for some bailout money. But the company seems to be saying it is fully capable of managing its own problems for now. If the market starts to sense, though, that the profitable parts of GE, the industrial stuff, will be the next shoe to drop in the economic slowdown…look out.

Deals of the day:

* Washington Mutual , the large U.S. savings and loan company beleaguered by mortgage losses, has approached private-equity firms about a potential takeover after a line-up of listed firms showed reluctance, the Wall Street Journal said citing people familiar with the situation

* Hynix Semiconductor said it would sell part of its stake in a Chinese joint venture to partner Numonyx for $100 million, as Numonyx seeks to raise its control over the Hynix-led chip plant.

* South Korea’s antitrust watchdog said it had granted conditional approval for eBay Inc’s plan to buy a controlling stake in South Korean online retailer Gmarket.

* French insurer AXA and Munich Re’s insurance unit ERGO are among the preliminary bidders for a small South Korean life insurer put up for sale, a source at the domestic insurer said.

* China’s Xuzhou Construction Machinery Science & Technology said that it will buy operating assets worth 5.31 billion yuan ($778 million) from its state-run parent via a share placement.

* Grange Resources will merge with Australian Bulk Minerals in an all stock deal to create a A$1 billion ($833 million) mining company, Grange said in a statement.

Will GE meet its lowered profit forecast for 2008?