Earnings Jitters Sink Blue-Chips

General Electric is revisited. Tech shares are little changed.

Author:: Kevin Burke
Publish date:: Apr 15, 2002 4:35 PM EDT

Updated from 4:03 p.m. EDT

Blue-chips dropped Monday, pulled down by persistent worries about earnings at

General Electric

(GE) - Get Report

and terrorism jitters, while tech stocks were close to unchanged.

The

Dow Jones Industrial Average ended down 97.15 points, or 1%, at 10,093.67. The

Nasdaq lost 2.40 points to 1753.79, and the

S&P 500 was off 8.46 points, or 0.8%, to 1102.55.

GE was down $1.70, or 5%, to $31.85 as investors continued to brood over earnings quality at the conglomerate following a

New York Times

article over the weekend. The company reported earnings last week that were in line with analysts' estimates but helped by one-time gains. Shares of

Tyco

(TYC)

fell 65 cents, or 2.1%, to $29.95, on similar concerns.

GE's woes overshadowed solid profit reports from

Citigroup

and

Bank of America

(BAC) - Get Report

, which both posted bottom-line increases on strong home loan and credit card operations. A big charge related to Argentina dropped Citigroup's results below analysts' estimates, while Bank of America topped expectations by 4 cents. Citigroup lost 2.5% at $45.75, and Bank of America was down 1.2%.

Low interest rates also boosted results at

Fannie Mae

(FNM)

. The government-sponsored loan reseller said operating earnings were $1.52 billion, or $1.48 a share, compared with $1.24 billion, or $1.20 a share, a year earlier. Analysts were expecting $1.47 a share, on average. The company was also moving to appease bond investors by rescinding a redemption of $1.5 billion in old asset-backed securities that holders said was going to cost them some $130 million. Fannie was down 1% to $80.70.

The story was different at

Eli Lilly

(LLY) - Get Report

, where a falloff in sales of anxiety medication Prozac caused earnings to decline to $629.2 million, or 58 cents a share, from $806.8 million, or 74 cents a share, a year earlier. The result was in line with analysts' estimates. The loss of the Prozac patent and increased competition from generics contributed to a 9% revenue drop at the drugmaker. Still, shares of Lilly added 2.4% to $75.20.

AOL Time Warner

(AOL)

was among the winners on the

New York Stock Exchange, following a three-month slump brought on by concerns about its America Online unit that caused institutional holders to bail out en masse. AOL was up 6.2% to $21.35.

On the research front, Prudential Securities raised its investment rating on

BEA Systems

(BEAS)

to buy from hold, citing strong business trends in its market. But the firm wasn't upbeat about

Computer Associates

(CA) - Get Report

, which it cut to a hold rating from a buy rating because of worries about the software maker's accounting practices. BEA was up 5.2%, while CA fell 7.5%.

Meanwhile, Venezuelan President Hugo Chavez is back in power after a weekend of street protests greeted his military ouster. Pedro Carmona spent all of about 48 hours in office. Observers say his suspension of constitutional rule and threats to summarily fire elected officials led to a groundswell of popular and military support for the return of Chavez. Chavez has been instrumental in keeping Venezuela's oil output in line with OPEC quotas and his return to office sent the price of crude higher.

Airline stocks were under pressure as oil prices rose and

Continental Airlines

(CAL) - Get Report

warned that the bloated state of the industry continues to hold down revenue. Continental was off 4%,

Delta

(DAL) - Get Report

shed 3.5%,

UAL

(UAL) - Get Report

slid 3.4%, and

AMR

(AMR)

dropped 3.9%.

Stocks were higher overseas, with London's FTSE 100 up 0.8% to 5201 and Frankfurt's Xetra Dax ahead by 1.1% to 5244. In Asia, Japan's Nikkei rose 1.6% to 11,137 while Hong Kong's Hang Seng gained 0.2% at 10,728.

Treasuries were climbing, with the 10-year note up 5/32 to 98, yielding 5.13%. The 30-year bond was gaining 12/32 to 96 17/32.