Stocks tumble on profit-taking, accounting worries

AP Business WriterNEW YORK (AP) -- Wall Street fell back Friday as investors, beset by new accounting concerns at IBM, decided it was time to sell and lock in profits from the week's rally.

A disappointing consumer sentiment survey provided even more incentive to retreat. Analysts said the decline, while not surprising after the market's big move up, reflected investors' ongoing reluctance to commit until earnings are more certain. The tech sector suffered the steepest loss.

The Dow Jones industrial average closed down 98.95, or 1.0 percent, at 9,903.04, according to preliminary calculations, pulling back from the 10,000 level it passed by just over a point on Thursday. The Dow had gained 376 points in the previous five sessions.

Broader stock indicators also fell, with the tech-focused Nasdaq composite index losing 38.18, or 2.1 percent, to 1,805.19. The Standard & Poor's 500 index fell 12.30, or 1.1 percent, at 1,104.18.

For the week, the Dow gained 1.6 percent, the Nasdaq fell 0.8 percent and the S&P advance 0.7 percent.

"The market is continuing to vacillate between focusing on the economy and accounting nightmares. Today it's focusing on the accounting," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.

IBM slid $5.00 to $102.89 on reports the technology bellwether used a $300 million sale to lower its fourth-quarter operating costs. The company denied any wrongdoing.

Investors also sent shares of Nvidia down $4.81 to $57.35 after the manufacturer of graphics chips revealed the Securities and Exchange Commission is looking into some of its 2000 and 2001 results.

"IBM is a lot of what's hurting the Dow. But the fact that IBM and Nvidia are both technology companies is really being felt on the Nasdaq," Hyman said. "Investors are starting to wonder about growth stocks in general, and question whether a growth stock become a growth stock through the use of aggressive accounting. Whether that's true or a bad thing, I don't know. But that's the perception."

Indeed, Dell Computer fell 80 cents to $25.60 after the company said slow first-quarter sales should pick up as businesses and other large customers begin spending later this year on replacement technology.

The selling spread to retail and financial stocks. Home Depot dropped $1.03 to $50.52, while J.P. Morgan slipped 16 cents to $30.05.

Mixed economic news failed to ease Wall Street's anxiety. Although the government reported a smaller-than-expected increase in inflation and better-than-expected industrial production numbers, a closely followed gauge of consumer sentiment declined.

The University of Michigan's mid-month report on consumer sentiment for February was said to have decreased to 90.9 from 93.0 in January, Dow Jones News reported Friday. Analysts had expected the index to be unchanged.

The selloff followed what had been a generally strong week for stocks. The market had been moving higher, rebounding from a monthlong selloff on doubts about the accuracy of corporate bookkeeping and concerns that business is still sluggish. Those concerns still remain, however, leading some to doubt the market can go much higher until they are resolved.

The week's gains had also come on low trading volume, suggesting the support for the advance was not very strong to begin with. And with U.S. markets closed Monday for Presidents Day holiday, some investors had another reason to sell.

"You don't want to have any big bets out there over a long weekend because the way the news is flowing these days, you never know what could happen," said Rafael Tamargo, director of equity research at Wilmington Trust.

For the week, the Dow gained 1.6 percent, the Nasdaq fell 0.8 percent and the S&P advance 0.7 percent.

Declining issues led advancers 5 to 4 on the New York Stock Exchange. Volume came to 1.35 billion issues, compared with 1.26 billion issues Thursday.

The Russell 2000 index lost 1.50 to 469.25.

Overseas, Japan's Nikkei stock average dropped 0.3 percent. In Europe, Germany's DAX index lost 2.2 percent, Britain's FT-SE 100 fell 0.5 percent, and France's CAC-40 slipped 1.2 percent.

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