Posted at 12:08 p.m., Tuesday, January 29, 2002
Accounting woes unnerve investors
| • | Hawai'i Stocks |
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By Lisa Singhania
Associated Press
NEW YORK — Investors showed a growing lack of faith in corporate America's accounting practices today, sending the Dow Jones industrials tumbling nearly 250 points on worries that more companies might be vulnerable to bookkeeping scandals.
Analysts said Wall Street, already jittery about the timing of an economic recovery, was concerned that companies including the conglomerate Tyco might suffer from the same type of balance-sheet irregularities that brought down Enron. Even stronger-than-expected consumer confidence numbers failed to stop the selling.
The Dow closed down 247.51, or 2.5 percent, at 9,618.24, according to preliminary calculations. The selling snapped a four-day winning streak and brought the blue-chip index to levels not seen since mid-November. It was the biggest point drop in three months.
The losses were even more significant in broader indicators. The Nasdaq composite index fell 50.95, or 2.6 percent, to 1,892.96. The Standard & Poor's 500 index dropped 32.42, or 2.9 percent, to 1,100.64.
"On the heels of this Enron situation, people are very concerned about accounting practices," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "People get concerned that we may have some other companies pulling shenanigans like Enron. People don't want to own them ... and that's undermining confidence."
Tyco tumbled $8.35, or 19.9 percent, to $33.65 on worries that the conglomerate was carrying so much debt on its balance sheets that it would be unable to grow. The selling intensified on a Wall Street Journal report that the company had paid $20 million to one of its outside directors and a charity he controls for advice on a merger. Tyco also recently announced plans to split up, raising concerns about tax consequences.
Declining issues led advancers nearly 3 to 1 on the New York Stock Exchange. Volume was extremely heavy, well over a billion shares.
The Russell 2000 index slipped 7.30, or 1.5 percent, to 473.98.
Overseas, Japan's Nikkei stock average slipped 1.9 percent. In Europe, Germany's DAX index fell 1.4 percent, Britain's FT-SE 100 tumbled 1.8 percent, and France's CAC-40 lost 1.4 percent.
