NEW YORK – Stocks retreated Friday as persistent jitters over questionable accounting practices and mounting debt in the telecommunications sector sapped investors' confidence.
The blue-chip Dow Jones industrial average fell 98.95 points, or 0.99 percent, to 9,903.04. The Dow fell below the 10,000 mark after ending Thursday above the key level for the first time since mid-January.
The technology-packed Nasdaq Composite Index tumbled 38.18 points, or 2.07 percent, to 1,805.19, ending lower for the third week in a row. The broad Standard & Poor's 500 Index dropped 12.30 points, or 1.10 percent, to 1,104.18.
For the week, the Dow rose 1.6 percent, the best week so far this year, and the S&P 500 added 0.7 percent. But the Nasdaq composite dropped 0.75 percent.
"Accounting and bookkeeping and finance ... are the raw material for Wall Street," said Michael Vogelzang, president of Boston Advisors Inc., with more than $1 billion in assets. "If the confidence in those numbers goes away or weakens, you're going to see prices go down."
Traders headed to the sidelines ahead of a three-day holiday weekend -- the stock market is shut Monday for the Presidents Day holiday. Investors are bailing out of stocks at the first hint of impropriety after a rash of accounting scandals that began with bankrupt energy trader Enron Corp.
Consumers reined in their optimism in early February as stocks stumbled while U.S. factory output dipped in January, according to reports that hinted a recovery from recession may be slow and arduous. The data came as a letdown after reports earlier this week showed a surge in January retail sales, minus cars, and a drop in weekly jobless claims.
"I think we have another month or so of this sloppy market," said Jeff Kleintop, chief investment strategist at PNC Advisors, which oversees $65 billion. "One day people will be excited about the economy, and the other day they will be concerned about further accounting issues. It's almost a bi-polar market."
IBM slumped $5 to $102.89, dragging on the blue-chip Dow. The computer giant came under scrutiny after The New York Times reported it hadn't disclosed a $300 million gain on the sale of an optical unit, but that it was this gain that enabled IBM meet fourth-quarter earnings estimates.
An IBM spokeswoman said IBM had adequately disclosed the sale of the unit through two press releases from Canada's JDS Uniphase Corp., which had bought the unit.
Computer graphics chipmaker Nvidia fell $4.81 to $57.35. The company was stung when it announced an internal investigation after a Securities and Exchange Commission inquiry. Nvidia was the best performer in the S&P 500 index last year, a distinction it inherited from Enron, the index's best performer of 2000.
"This accounting cloud is going to hang over the market for a while," said Milton Ezrati, senior economic strategist at Lord Abbett & Co., which manages about $42 billion. Investors have learned "you have to do your own homework ... you can't trust anyone but yourself, including corporate management."
Take-Two Interactive Software Inc. slipped 38 cents to $18.18, after dropping as low as $14 in its first day of trading since Jan. 22. Trading in the video game publisher's shares was halted in late January after the company postponed its quarterly results because it was still reviewing a restatement of its seven previous quarters due to accounting concerns.
Almost Family Inc., an adult day health-care services provider, tumbled $4.37 to $10.33. Almost Family announced accounting errors for employee health benefits and said it will restate results for the last two fiscal years.
Symbol Technologies Inc., a maker of bar-code scanners and other mobile data terminals, took a nose dive after its warning of lower earnings and the retirement of its chief executive set off alarm bells. It dropped $3.39 to $8.40.
Qwest Communications International Inc. ended up 7 cents at $7.56. The company had suffered losses earlier in the session after it was forced to tap into its line of credit and three debt ratings agencies downgraded the voice and data services company.
WorldCom Inc., which has been plagued by concerns about its debt levels, fell 39 cents to $6.73 and was the most active on Nasdaq. The No. 2 U.S. long-distance phone company suspended three employees and froze the commissions of at least 12 sales people as part of a broad investigation of an order-booking scandal that boosted sales commissions in three branch offices, according to The Wall Street Journal.
Other telecom-related firms also took a hit, like Sprint PCS Group, which dropped 93 cents to $9.27. The American Stock Exchange's North American Telecommunications index fell 1.90 percent, its lowest level in at least four years.
One bright spot was oil field services firm Halliburton Co. , which jumped after it said a U.S. Bankruptcy Court issued a temporary restraining order staying more than 200,000 pending asbestos claims against its unit Dresser Industries Inc. It climbed $1.61 to $16.27.
ImClone Systems Inc. also gained after it moved to protect itself from a hostile takeover attempt as billionaire financier Carl Icahn filed to acquire up to $500 million of the biotechnology company's shares. It rose 84 cents to $18.44.
Winners matched losers on the New York Stock Exchange, but declining stocks outnumbered advancers by 10 to 7 on Nasdaq. More than 1.35 billion shares traded on the Big Board, and more than 1.6 billion on Nasdaq. Volume was lighter than average daily amounts logged on the exchanges in January.
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.
Reuters and the Associated Press contributed to this report.