Stock Slump Persists for 5th Day Amid Accounting Fears
Stocks slumped for a fifth session Thursday, marking the longest losing streak for broad market indexes since the week trading resumed after the Sept. 11 terrorist attacks.
Fears of more corporate accounting scandals continued to weigh heavily on investors, analysts said.
In other trading, gold futures prices briefly rose above $300 an ounce for the first time in two years, as some investors apparently sought refuge from troubled markets.
On Wall Street, the blue-chip Standard & Poor’s 500 eased 3.34 points, or 0.3%, to 1,080.17, the lowest close since Oct. 31. The S&P; has slumped 4.4% during the last five sessions.
The Nasdaq composite index dropped 30.60 points, or 1.7%, to 1,782.11, extending its decline during the last five sessions to 7.9%. The index is at its lowest since Nov. 2.
The Dow industrial average fell 27.95 points, or 0.3%, to 9,625.44. It has lost 3% in the last week.
The Dow dropped for six straight sessions early in January, but the broader market had not lost ground for five sessions since Sept. 17-21, as trading reopened after the attacks. The sell-off that week clipped 14.3% off the Dow and 16.1% off the Nasdaq index.
The market then rallied sharply in the fourth quarter, amid growing hopes for an economic recovery in 2002. Now, even as a recovery seems more likely, the market’s confidence has been dented by the Enron debacle and fears that many firms in recent years used aggressive accounting to artificially inflate earnings.
“Obviously, there’s been a real shaking of investor confidence ... with regard to these accounting and regulatory issues,” said Joseph Keating, money manager at AmSouth Asset Management. “I think the economy is recovering....But until this crisis of confidence passes, it’s going to be very hard for the market to hold any gain.”
On Thursday, stocks rallied in the late morning, sold off at midday, rallied again in the afternoon, then sold off in the final hour.
Losers outnumbered winners by 17 to 14 on the New York Stock Exchange and by 3 to 2 on Nasdaq.
The S&P; 500 now is 11.8% above its three-year closing low reached Sept. 21. Falling through that mark could shake Wall Street, some analysts say. The Nasdaq index is 25% above its Sept. 21 close, and the Dow is 17% above its close that day.
On Thursday, Nasdaq was led lower by Cisco Systems, which fell $1.55, or 8.3%, to $17.06 after the networking giant gave a guarded financial forecast for the near term.
Other weak tech stocks included Broadcom, down $3.08 to $36.92; IBM, down $2.72 to $103.91; and KLA Tencor, off $4.49 to $54.41.
Drug firm Elan fell 51 cents to $13.49, a 52-week low. After the market closed, the company said the Securities and Exchange Commission has launched an investigation of the firm related to allegations of misleading accounting.
But some stocks recently battered by accounting concerns attracted buyers Thursday, including Tyco, up $2.13 to $28.05, and Cendant, up 45 cents to $16.02.
Many bank stocks edged higher after sliding in recent sessions on concerns about troubled loans. Citigroup added 14 cents to $44.14 and J.P. Morgan Chase rose 63 cents to $30.07.
Newspaper stocks rallied after investment firm Dresdner Kleinworst Wasserstein raised several of the stocks to “buy,” including Gannett, up $2.49 to $69, and Dow Jones, up $1.23 to $53.29.
Gold mining stocks were strong as near-term gold futures prices in New York rose as high as $301.50 an ounce, a two-year high. The price then slipped back to close up $2.20 at $299.70.
Among gold firms, Placer Dome jumped 98 cents to $13.38, Goldcorp gained 92 cents to $16.22 and Barrick Gold was up 81 cents to $18.77.
Japan’s Nikkei 225 index rallied 1.7% to 9,583.27 after falling in six of the seven previous sessions.
Market Roundup, C6-7
