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- Councilman: Scott City mayor, city administrator resigned (8/15/17)4
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Stocks fall on accounting worries, tensions overseas
AP Business WriterNEW YORK (AP) -- Skeptical about corporate accounting practices and worried about conflicts overseas, investors dumped stocks Monday, sending the Nasdaq composite index to its lowest level this year and the Dow Jones industrials skidding more than 200 points.
Investors still nervous about companies' books following Enron's collapse were upset by news of that Tyco's CEO had resigned and that Microsoft had agreed to settle charges that it misrepresented its finances. They disregarded two positive economic reports in the process.
"It makes it very difficult for people to invest in the market when they don't have a clue what a company's revenues and profits are," said Al Mirman, strategist at V Finance in Sarasota, Fla. "Companies are reporting profits that are not real. They are restating results. People just don't have confidece in companies."
The Dow closed down 215.46, or 2.2 percent, at 9,709.79, according to preliminary calucations. The last time the Dow finished lower was Feb. 7, when it stood at 9,625.44. The blue-chip index hasn't had a bigger one-day point drop since Feb. 4 when it lost 220.17.
Broader stock indicators also tumbled. The Nasdaq fell 53.17, or 3.3 percent, to 1,562.56. It was the Nasdaq's lowest close since Oct. 2.
The Standard & Poor's 500 index dropped 26.49, or 2.5 percent, to 1,040.65.
The sell-off accelerated in the final hour of trading, which analysts attributed to the Dow having broken below the 9,800 level and triggering programmed selling. Institutional investors often select a certain level at which to sell blocks of stocks.
"And, no one is around to buy. No one is interested. I throw good economic news at them, and they say, 'So what?,"' said Larry Wachtel, market analyst at Prudential Securities.
The market has not enjoyed a decidedly positive day since May 23, six sessions ago and the last time that the three major indexes ended in positive territory.
Tyco slid $5.90, or 27 percent, to $16.05 on news CEO L. Dennis Kozlowski had unexpectedly resigned following reports that he is being investigated for possibly avoiding paying New York state sales taxes. Analysts said the news raises concerns about how he ran the company, which has faced questions about its complex bookkeeping.
Microsoft fell $1.49 to $49.42 after agreeing to refrain from accounting violations as part of a settlement with the Securities and Exchange Commission of charges that Microsoft misstated results. Under the settlement, Microsoft did not admit or deny wrongdoing.
Energy company El Paso dropped $3.70 to $21.95 following news that senior vice president and treasurer Charles Dana Rice was found dead Sunday in what police said was a suicide. Last week, El Paso said it would overhaul its accounting practices to make them easier to understand. However, there was no information to immediately connect Rice's death with El Paso's announcement, and industry executives said Rice was known to have long-term health problems.
The list of companies being scrutinized in their bookkeeping has been increasing at a steady pace, which analysts say has contributed to the market's malaise. Monday's developments overshadowed upbeat news on the economy.
The Institute for Supply Management, which tracks the health of the manufacturing sector, said its index of business activity rose to 55.7 percent in May, better than the 55.0 reading that analysts had forecast.
And, the Commerce Department said construction spending rose 0.2 percent in April.
Prospects of disappointing earnings also weighed on a variety of stocks. Retailer Lowe's fell $1.91 to $45.25, declining for a second consecutive session after reducing its 2002 outlook.
Ford slipped 34 cents to $17.31 after reporting sales for its Ford, Lincoln and Mercury brands decreased by 11.5 percent in May compared with a year earlier.
Analysts said investors are becoming less worried about missing out on the market's next bull market, and more concerned with protecting what's left of their portfolios following two straight years of decline.
"Investors are saying, 'I just don't want any more pain. I am willing to cut my losses,"' said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.
"The most important thing to investors right now is safety."
Declining issues outnumbered advancers more than 7 to 3 on the New York Stock Exchange. was light.
The Russell 2000 index, the barometer of smaller company stocks, fell 13.08, or 2.7 percent, to 474.39.
Overseas markets were mixed. Japan's Nikkei stock average rose 1.2 percent, France's CAC-40 fell 1.1 percent, and Germany's DAX index lost 1.5 percent.
The London Stock Exchange was closed Monday for a holiday. The market will also be closed Tuesday and reopen Wednesday.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com