Stocks slip again on investor doubs about earnings, accounting

AP Business WriterNEW YORK (AP) -- Wall Street waded through another disappointing session Wednesday, dropping for the fourth straight day as investors looked in vain for firm indications that business is improving and corporate accounting can be trusted.

Stocks fell on news that federal regulators were looking into Calpine's bookkeeping. The market's mood was also gloomy because of lingering uncertainty about an overall business recovery.

The Dow Jones industrial average closed down 32.04, or 0.3 percent, at 9,653.39, according to preliminary calculations, for a total loss of 266 points since Friday.

The technology-focused Nasdaq composite index suffered a more significant loss, falling 25.79, or 1.4 percent, to 1,812.73. The Standard & Poor's 500 index slipped 6.51, or 0.6 percent, to 1,083.51.

"This is still a skeptical market, so it's going to be a struggle to rally," said Larry Wachtel, market analyst at Prudential Securities.

Wall Street spent much of the session waiting for quarterly results from Cisco Systems, which were due out after the market closed. A company memo released Tuesday suggested those numbers would beat expectations, causing the stock to rise 11 cents to $18.61. But investors were still waiting to get the exact figures, as well as the company's assessment of what future business might look like.

A bullish outlook from Cisco could help improve the market's mood, but analysts say investors have become extremely risk-averse, and it will take more than one cheery forecast to ease their fears.

"I think the market will care to a degree what Cisco says, but people have had such huge losses in tech stocks that they really don't trust a lot of things that these companies say," said Larry Rice, chief investment officer at Fahnestock & Co. "Someone's always going to say how did they get to those numbers? What math did they do to beat expectations?"

Indeed, investors have been waiting for months for some kind of catalyst to convince them that now is the time to buy. Many had expected upbeat corporate forecasts in January to provide a spark; when those outlooks failed to materialize, stocks fell back.

More recently, the Enron accounting scandal, as well as doubts about bookkeeping at Tyco and other companies, have made Wall Street question the validity of earnings reports in general. Those fears have exacerbated concerns that stock prices are too high, given the murky forecast for earnings and the failure of most companies to say that business has turned around.

"If people are not sure of the quality of earnings, then they tend to pay a lesser valuation for them," Wachtel said. "It's tough getting anything going in that kind of environment."

In trading Wednesday, Tyco managed a small rebound from the selling that has devastated the stock over the last week on questions about its books. It rose $2.82, or 12 percent, to $25.92 after executives said the company would be more forthcoming about its finances and progress in plans announced last month to break the corporation into four separate companies.

But that buying failed to spark any broader momentum.

Calpine fell $1.95 to $6.80 on news the company received a letter from the Securities and Exchange Commission on Dec. 20 regarding a review of its disclosure practices.

Technology stocks were particularly vulnerable, with Intel dropping 88 cents to $32.92 and Microsoft losing 70 cents to $60.45.

Financials were weak, too. American Express fell $1.60 to $32.90.

Also Wednesday, the Labor Department reported Wednesday worker productivity in the last three months of 2001 rose by the largest amount in more than a year as businesses cut workers' hours and eliminated jobs to cope with the ailing economy. Wall Street showed little reaction to the news, however, because the information concerns past, not current or future events.

Declining issues led advancers more than 2 to 1 on the New York Stock Exchange. Volume came to 1.65 billion shares, compared with 1.77 billion shares Tuesday.

The Russell 2000 index fell 6.41 to 462.41.

Overseas, Japan's Nikkei stock average fell 0.6 percent. In Europe, Germany's DAX index dropped 2.7 percent, Britain's FT-SE 100 slid 0.4 percent, and France's CAC-40 lost 0.8 percent.

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