- A Whopper of an honor: Local company named top Burger King franchisee (11/15/17)3
- Decisions coming soon on steel mill, smelter in New Madrid (11/17/17)1
- Southern Illinois farmer's grapevines destroyed by dicamba; four years of work lost (10/29/17)2
- Cape attorney Brandon Cooper to run for judge (11/20/17)2
- State audit: Bollinger County tax levies violate state law; county commission disagrees (11/17/17)3
- Aldi store reopens after renovations (11/14/17)3
- Cape native co-directs Thanksgiving-related indie film, 'Drinksgiving' (11/17/17)
- The Tungsten Groove to release first album featuring original songs (11/17/17)
- Son of Westboro Baptist Church patriarch discusses abuse, faith (11/15/17)6
- 1 dead, 3 hurt in accident on Highway 72 (11/19/17)
Dow tumbles nearly 250 points
AP Business WriterNEW YORK (AP) -- Investors showed a growing lack of faith in corporate America's accounting practices Tuesday, 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. 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 50.93, or 2.6 percent, to 1,892.98. 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.
"What's happening here is that institutions with big positions in Tyco are trying to cut their positions back and no one's buying," said Bill Barker, investment consultant at RBC Dain Rauscher. "That's driving the stock price down."
Analysts said the market's nervousness extended to General Electric, which also operates in a variety of industries. GE dropped $1.69, or 4.4 percent, to $36.46.
Richard A. Dickson, technical analyst at Hilliard Lyons, said the Enron debacle has made many investors uneasy about complicated corporate structures. Enron, which has filed for bankruptcy, is under investigation for its accounting practices.
He also said investors don't have a strong reason to buy right now.
"There are a lot of things out there that people kind of look at and say, 'Maybe we better just sit on the sidelines or take money out of the market,"' he said. "The psychology is very negative right now."
The Dow was also hurt by IBM, which slid $5.15, or 4.8 percent, to $103 on word its board had elected Samuel Palmisano as new CEO to replace Louis Gerstner.
Gerstner, who is retiring, had hinted last year that Palmisano would succeed him.
"It's partially the Gerstner issue, but there are some people who are critical of IBM's accounting practices too," Barker, the RBC Dain Rauscher consultant, said. "The feeling is, if there's that much uncertainty out there, why place the bet and buy stocks?"
He said Wall Street is also scrutinizing the financials of Williams Cos., which like Enron trades energy. Williams fell $5.36, or 22.2 percent, to $18.78 after delaying its release of fourth-quarter earnings early Tuesday -- citing the need to assess financial obligations related to its spinoff last year of Williams Communications Group Inc.
The selloff followed weeks of frustrating trading as Wall Street repeatedly tried in vain to mount a sustainable rally. Analysts blame nagging doubts about when the recovery will come and if it will be strong enough to justify the prices stocks are currently trading at. Investors were disappointed with fourth-quarter results that largely met reduced expectations but failed to show that companies see a turnaround ahead for their business.
That disappointment has made investors more inclined to sell than buy. Even two economic reports that suggested the economy is strengthening failed to inspire investors.
Wall Street shrugged off a Conference Board report showing consumer confidence improved for the second straight month in January, helped by increased optimism about jobs and the economy. The report is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity.
Also, the Commerce Department said orders to U.S. factories for durable goods rose a bigger-than-expected 2 percent in December, suggesting better days might be ahead for the nation's battered manufacturing sector.
Both reports added to investors' expectation that the Federal Reserve's Open Market Committee, which began a two-day meeting Tuesday, would not cut rates. Still, traders want to hear what the agency will have to say Wednesday about the economy's direction.
Declining issues led advancers nearly 3 to 1 on the New York Stock Exchange. Volume came to 1.77 billion shares, well over the 1.17 billion shares reported Monday.
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.
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