Stocks mixed, endure big quarterly losses

AP Business WriterNEW YORK (AP) -- Wall Street ended a truly terrible quarter with a whimper Friday when stocks retreated from a solid advance and ended the session mixed. Blue chips pulled back, while tech shares posted a slim gain.

Although stocks gave up their gains late in the day as President Bush announced he would undergo a colonoscopy on Saturday, the market showed some resilience, having risen despite news of more accounting problems, this time at Xerox.

"We know there are problems in some corporations in America. So this is more bad news, but not new bad news," said Arthur Hogan, chief market analyst at Jefferies & Co.

Investors also looked past a decline in consumer spending for May, largely because it was a smaller-than-expected decrease.

The Dow Jones industrial average closed down 26.66, or 0.3 percent, at 9,243.26, according to preliminary calculations. The Dow suffered its sixth straight weekly decline, declining 0.2 percent.

The broader market was mixed. The Nasdaq composite index rose 5.78, or 0.4 percent, to 1,464.98.

The Standard & Poor's 500 index slipped 0.82, or 0.08 percent, to 989.82.

The Nasdaq and S&P managed to break their five-week losing stretch. The Nadaq had a weekly gain of 1.5 percent; the S&P, 0.3 percent.

But analysts weren't that enthused about the gains, saying they were owed largely to bargain hunting. Investors are tempted by lower prices, but they are also wary of committing to the market given the accounting woes and uncertain outlook for earnings.

"Skeptical buying is definitely what's prevailing," said Ned Riley, chief investment strategist at State Street Global Advisors.

Riley also attributed the modest advances to technical factors such as window dressing, the end-of-quarter strategy of institutional investors who buy shares to make their portfolios look more impressive in reports to shareholders.

But it's impossible to disguise what was a dismal second quarter, with stocks pummeled by bleak earnings prospects, fears of terrorism and a series of revelations about improper accounting. The indexes suffered double-digit percentage drops with the Nasdaq plunging 20.7 percent. The S&P had a loss of 13.8 percent; the Dow, a loss of 11.2 percent.

On Friday, the market shrugged off news that Xerox had improperly recorded $3 billion in revenue from 1997 through 2000, and that it will restate as much as $1.9 billion in earnings for those years.

While Xerox fell $1.03 to $6.97, analysts say accounting scandals have been factored into the market's prices following a string of disclosures beginning with Enron's collapse in December and including a $3.8 billion scandal this past week at WorldCom.

Xerox's problems are also not surprising. In April, the SEC said accounting improprieties at the company increased profits by $1.5 billion from 1997 through 2000. Xerox is paying a $10 million civil penalty.

Among Friday's winners, General Motors rose $1.95 to $53.45, recouping the $1.58 it lost Thursday amid rumors -- denied by GM -- of irregular accounting.

But Electronic Data Systems fell 15 cents to $37.15, adding to losses from Thursday amid worries about its exposure to WorldCom, which is a customer.

WorldCom disclosed late Tuesday it had disguised $3.8 billion in expenses, meaning it may have been losing millions as it reported profits. WorldCom stock has not opened for trading since that announcement.

The Commerce Department reported consumer spending slipped 0.1 percent in May, but beat analysts' expectations for a 0.2 percent decline. Consumer spending is closely watched because it accounts for two-thirds of the economy.

Retailers were mixed following the news about consumers. Wal-Mart fell $2.69 to $55.01. But Claire's Stores rose $1.24 to $22.90, having raised its second-quarter earnings forecast on Thursday.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Volume was heavy.

The Russell 2000 index, the barometer of smaller company stocks, rose 3.94, or 0.9 percent, to 462.66.

Overseas, Japan's Nikkei stock average finished Friday up 3.5 percent. In Europe, France's CAC-40 surged 4.2 percent, Britain's FTSE 100 rose 2.6 percent, and Germany's DAX index climbed 2.9 percent.

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