- The Washington Times - Friday, July 19, 2002

NEW YORK (AP) Wall Street tried but failed yesterday to extend a one-day rebound, succumbing instead to late-afternoon selling on questions about AOL Time Warner's accounting and pessimism about second-quarter earnings reports.

The Dow Jones Industrial Average had its sixth triple-digit loss in nine sessions, while the Standard & Poor's 500 Index closed below 900 for the first time in nearly five years. Analysts said the pullback reflected investors' continuing lack of confidence.

The Dow closed down 132.99, or 1.6 percent, at 8,404.49, after rising as much as 79 points earlier in the day. The Dow has now fallen 975.01 in nine sessions.

The losses were more intense in broader stock indicators. The S&P 500 was down 24.48, or 2.7 percent, at 881.56, its lowest finish since Oct. 27, 1997 when it fell to 876.99. The Nasdaq Composite Index lost 40.30, or 2.4 percent, closing at 1,356.95.

All three indexes closed higher Wednesday for the first time in nearly two weeks, but analysts weren't surprised that the market faltered.

"The general public hasn't made money in the stock market for two years now, so there is an acceleration of redemptions in mutual funds and stocks as investors switch to other types of investments," said Bill Meade, managing director, RBC Capital Markets.

Indeed, investor confidence remains fragile because of the market's weak performance and the accounting scandals. At the same time, prospects for a vigorous economic recovery have all but disappeared.

As a result, many investors and institutions have been selling stocks and shifting into more conservative investments. The losses tend to intensify late in the session, as computerized trading programs kick in. And the scarcity of buyers for stocks make stock prices more susceptible to sudden, sharp declines.

AOL Time Warner fell 66 cents to $12.45 after a Washington Post story that questioned its bookkeeping practices. The article unnerved investors, who have watched stocks slide for months now on similar concerns at other companies. AOL Time Warner denied any wrongdoing. Late in the day, the company said Chief Operating Officer Robert Pittman was leaving his post as part of a management shake-up.

Economic news was mixed. The Labor Department said new claims for unemployment insurance fell last week to the lowest level in 17 months. But the Conference Board said its Index of Leading Economic Indicators held steady in June.

The figure matched analyst expectations but raised concerns that the recovery's momentum is fading as consumer confidence slips because of corporate accounting scandals.


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