Scandals stifling stock health

By Seth Sutel
Associated Press

Vincent D'Agostio traded yesterday in the S&P 500 futures pit in Chicago on another down day for the stock market. Stock prices have fallen across the board amid persistent worries about corporate accounting scandals. Associated Press

NEW YORK — Dogged by a seemingly endless spate of accounting scandals, investors pushed stocks lower again yesterday, extending the market's six-week losing streak as disillusionment with corporate America's reporting methods deepened.

The Nasdaq composite index bore the brunt of the damage, closing at another five-year low as investors dumped technology shares following the disclosure of even more accounting irregularities at fallen tele-communications giant WorldCom.

The indicator had fallen below its post-Sept. 11 low the day before.

Broader indicators also suffered. The Dow Jones industrial average was off more than 100 points and the Standard & Poor's 500 index also dropped below its post-terrorist attack closing low, and to a level not seen since late 1997.

Responding to more financial questions facing beleaguered WorldCom, investors responded by dumping more of their technology holdings, sending the Nasdaq composite index down 45.98 or 3.3 percent to close at 1,357.82, after falling 4.1 percent on Monday. It was the lowest close for the index since May 19, 1997.

Market watchers described the declines as an emotional response to a seemingly relentless string of disclosures of questionable bookkeeping in recent months that have badly shaken confidence in the stock market.

"It seems like an acceleration of bad news these days," said Brian Bruce, director of global investments at PanAgora Asset Management in Boston. "People are just focusing on every bit of bad news that comes out now. This is clearly the flip side of the bubble mentality — people are looking for the next bad thing."

The Dow fell 102.04 or 1.1 percent to 9,007.75. The S&P 500 was down 20.56 or 2.1 percent at 948.09, dropping below its post-Sept. 11 low and at its lowest close since it reached 936.46 on Dec. 26, 1997.

Stock indicators have been on an almost uninterrupted slide since the middle of May as a wave of disclosures about questionable accounting practices at several major U.S. firms badly damaged investor sentiment, already shaken by the collapse of energy giant Enron.

Since May 17, the last time all three indexes had weekly gains, the Dow has dropped 13 percent, the Nasdaq has plummeted 22 percent, and the S&P has fallen 14.3 percent.

Investors said the market is still testing how badly confidence in U.S. companies has been damaged by accounting problems at Global Crossing and the cable TV company Adelphia Communications and the arrest of the former CEO of ImClone Systems.

Declining issues outnumbered advancing ones by a 3-to-1 ratio on the New York Stock Exchange, where composite volume came to 2.16 billion shares, above 1.73 billion shares on Monday.

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