Wall Street sells off again
NEW YORK (AP) – Investors sent stocks sharply lower for a second consecutive session Tuesday as worries about second-quarter earnings reports overshadowed President Bush’s proposal to increase the penalties for corporate fraud. The losses, which followed a selloff Monday, erased much of Friday’s big rebound rally. Analysts said that after months of accounting scandals and disappointing financial results, it will take more than a few words to convince investors that it is safe to come back to the market.
“We’re just coming into earnings season now,” said Will Braman, chief investment officer, John Hancock Funds. “It’s time for ‘show us the money,’ and investors’ expectations are not very high. There is a lot of skepticism. The numbers we get are going to be pawed over and looked at very critically.”
The Dow Jones industrial average closed down 178.81, or 1.9 percent, at 9,096.09. It was the average’s second triple-digit decline this week, for a total loss of 283.41 that wiped out much of Friday’s 324-point rebound. Stocks had pulled back Monday as investors collected profits.
Broader stock gauges also retreated Tuesday. The Standard & Poor’s 500 index fell 24.15, or 2.0 percent, to 952.83, and the Nasdaq composite index lost 24.49, or 1.7 percent, to 1,381.12. This week alone, the Nasdaq has tumbled 4.6 percent.
Bush called for longer prison sentences for executives who defraud the public and stronger powers for the Securities and Exchange Commission. He also wants to put together a task force to pursue and prosecute corporate fraud.
His remarks came in response to scandals at companies ranging from Enron to WorldCom that have cost investors billions of dollars. Investor confidence, already fragile because of the economic slump, has further declined amid the reports of accounting irregularities, contributing to the stock market’s malaise.
Bush’s comments failed to convince disillusioned investors that better days were ahead, however – perhaps because it’s too soon to tell whether his proposals will be implemented.
Declining issues led advancers 3 to 2 on the New York Stock Exchange. Consolidated volume came to 1.65 billion shares, compared with 1.42 billion Monday. Decliners led advancers 5 to 4 on the Nasdaq Stock Market.
The Russell 2000 index fell 4.36 to 429.25.
Overseas, Japan’s Nikkei stock average rose 1.8 percent.
In Europe, Germany’s DAX index lost 1.6 percent, Britain’s FTSE 100 was down 1.3 percent, and France’s CAC-40 slipped 1.0 percent.
—
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com