Accounting fears prompt Wall Street selloff

Concerns over a widening congressional investigation of Enron further soured the mood on Wall Street today and sent stocks tumbling.

The selloff pulled the Dow Jones industrials down more than 150 points and sent the Nasdaq composite index to its lowest close since November,

The market has now given back nearly all of its gains from this month’s big rally. Analysts said investors, doubtful that the economic recovery will be as quick and strong as hoped, did not want to risk losing profits to another Enron-type scandal.

The Dow closed down 157.90, or 1.6%, at 9,745.14. It was the lowest finish since February 7, when the index closed at 9,625.44.

The technology-based Nasdaq tumbled 54.59, or 3%, to 1,750.61, its worst showing since November 2 when it fell to 1,745.73. The Standard & Poor’s 500 index lost 20.84, or 1.9%, to 1,083.34.

Today’s losses appeared linked to selling that began on Friday on reports about IBM’s accounting. A New York Times story today about Enron reminded Wall Street that congressional investigators are widening their probe of the energy trader to include investment firms.

The story quashed investors’ hopes that the fallout from Enron might soon dissipate.

Stocks have been trading in a narrow range since the beginning of the year, alternating between losses and gains on questions about earnings and the integrity of corporate bookkeeping. With most corporations still unable to say resolutely that business is improving, investors are finding few reasons to buy.

IBM dropped dlrs 3.35 to dlrs 99.54 despite news that the company would release more details about its bookkeeping in response to investor concerns about greater disclosure.

Financial stocks also languished, including JP Morgan, down dlrs 1.02 at dlrs 29.03, and Citigroup, off dlrs 1.99 at dlrs 42.22. Analysts said investors were worried that the institutions would be hurt if the economic recovery turns out to be mild instead of robust.

The few bright spots reflected company-specific news, rather than broader industry moves. Travelocity.com surged dlrs 5.71 to dlrs 24.91 after Sabre Holdings announced it would acquire the remaining stake in the online travel company. Sabre, which already owns 70% of Travelocity, was down dlrs 2.34 at dlrs 42.94.

United Airlines’ parent company, UAL, rose dlrs 1.59 to dlrs 12.95 after the airline reached a tentative contract agreement with the union representing its mechanics and aircraft cleaners, averting a potentially crippling strike.

The Commerce Department reported construction of new homes and apartments rose 6.3% in January to the highest level in almost two years, the latest indication that the sluggish economy might be reviving.

Still, most analysts agree Wall Street wants to see more concrete, upbeat forecasts from big companies before getting too excited about any recovery.

Declining issues outnumbered advancers 2 to 1 on the New York Stock Exchange. Volume was light, totalling 1.18 billion shares, compared with 1.36 billion on Friday. Stock markets were closed on Monday for the President’s Day holiday.

The Russell 2000 index was off 9.27 at 459.98.