Investors to Weigh Accounting, Economics
When the stock market resumes trading Tuesday, so will Wall Street’s emotional tug-of-war between improving fundamentals in the economy and growing fears about the accuracy of corporate accounting.
The economic data in recent weeks have largely been pointing to a rebound in business activity that could revive corporate earnings by the second half of this year. But the good news has been overshadowed by mounting revelations of questionable, if not downright fraudulent, accounting at some major companies in recent years.
Last week, however, blue-chip stock indexes managed to post gains, despite more worrisome headlines about dicey accounting practices, particularly in the telecom sector.
The Standard & Poor’s 500 index lost 1.1% on Friday but still rose 0.7% for the week, after two straight weekly declines.
The Dow industrials ended Friday at 9,903.04, off 1% for the day but still up 1.6% for the week.
The tech- and telecom-dominated Nasdaq composite, however, fell 2.1% on Friday and 0.8% for the week--the third straight weekly decline. Nasdaq is down 7.4% this year, after plunging 21% last year and 39% in 2000.
Among the economic reports due this week:
* Tuesday, the Commerce Department will report on housing starts in January.
* Wednesday, the consumer price index for January will be released. Analysts predict the CPI will post a rise of 0.2% for the month.
* Thursday, the Conference Board will issue its index of leading economic indicators for January.
* Also Thursday, the Commerce Department will report on the U.S. trade balance for December.
Though fourth-quarter-earnings reporting season is nearly complete, a few major companies will report this week. Tuesday, Wal-Mart Stores Inc., the world’s largest retailer, and Medtronic Inc., the world’s largest medical device company, are expected to announce quarterly results.
Other companies expected to report this week include Aetna Inc. and California utility giant PG&E; Corp., whose Pacific Gas & Electric Co. unit filed for bankruptcy last April.
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Times Staff and Wire Reports
