NEW YORK – Stock indexes closed at the year's lows Friday, racking up five straight down weeks, hurt by new negative reports on corporate accounting, political conflict, economic uncertainty and weak profits.
The broad Standard & Poor's 500 fell 17.16 points, or 1.71 percent, at 989.13, according to the latest available figures. That's its lowest close since Sept. 21. Friday also marked the third straight daily loss of more than 1 percent for the S&P 500, the first such trend since trading resumed the week after the Sept. 11 attacks.
The technology-laced Nasdaq Composite Index was down 23.80 points, or 1.62 percent, at 1,440.95 -- also its lowest close since Sept. 21. The Dow Jones industrial average was down 177.98 points, or 1.89 percent, at 9,253.79, its lowest close since Oct. 31.
All three indexes have fallen for the past five weeks, a streak unseen for the S&P 500 since March 2001, when the index slid for eight straight weeks. For the week, the S&P 500 lost 1.8 percent, the Dow average fell 2.3 percent and the Nasdaq slid 4.2 percent.
A report that a Merck & Co. (MRK) subsidiary may have inflated its revenue rattled Wall Street, while investors fretted about the outlook for profits after two brokerages cut forecasts for bellwether International Business Machines Corp. (IBM). The weakening U.S. dollar also cut into confidence.
The simultaneous expiration of stock index futures, index options and individual equity options (also known as a "triple-witching" session) contributed to the jitters.
"There's a crisis du jour that keeps a lid on everything," said Dan Rivera, chief investment officer for U.S. equities at American Express Asset Management Group. "The government has turned the rock over on accounting and today it's Merck's turn in a barrel."
In the currency markets, the dollar fell to a 7-month low against the yen, as investors cast aside recent hesitation to sell the greenback aggressively for yen after Japan's Ministry of Finance said it has no power to dominate foreign-exchange markets. The euro hit a 26-month high against the dollar as investor confidence in U.S. assets waned, and exacerbated the record U.S. trade gap.
"There's a growing perception that first-quarter growth rates aren't going to be seen in the second quarter and there's a confidence issue," said Alan Kral, who helps oversee $750 million for Trevor Stewart Burton & Jacobsen Inc. "Throw these things in with the political risk and the dollar weakness -- the list of things hurting the market is endless."
Drugmaker Merck (MRK) dragged on the Dow, falling $2.22, or 4.3 percent, to $49.98, after a Wall Street Journal report that its pharmacy benefits manager subsidiary, Merck-Medco, inflated its revenue by recording co-payments from patients to pharmacies that Merck never actually collects.
The company said its Medco unit acted properly.
Rite Aid Corp. (RAD) rose 11 cents to $2.69 after the No. 3 U.S. operator of drugstores said it settled a government probe into its accounting practices without admitting or denying any wrongdoing, and would pay no fine.
Separately, U.S. regulators charged former Rite Aid executives with massively overstating earnings over two years ending in 1999.
IBM (IBM), also a Dow stock, fell $2.83, or 4 percent, to $68.75 after SoundView Technology Group cut its estimates on the No. 1 computer maker, saying the outcome for the quarter is unclear after the company's sale of its hard disk drive business.
Lehman Bros. also trimmed its earnings estimates for IBM for 2002 and 2003.
Amdocs Ltd (DOX) tumbled $5.96, or 41 percent, to $8.60 after the telecommunications software and services provider cut its profit outlook, named a new chief executive and said it would cut jobs to help recover from a drop in capital spending by service providers.
LaBranche & Co. (LAB) slumped $1.76, or 7.4 percent, to $22.10 after the New York Stock Exchange specialist firm warned second-quarter earnings could be as much as 50 percent below estimates because of a slowdown in equities trading.
In the latest in a series of warnings since the Sept. 11 hijacked plane attacks that killed about 3,000 people, FBI officials warned people could use fuel tanker trucks for attacks in the United States or against U.S. interests overseas, with Jewish schools or synagogues possible targets.
More violence in the Middle East also kept Wall Street on edge.
Scores of Israelis have been killed recently in a spate of suicide bombings by Palestinian militants.
"First, there's the weakness in technology and telecom, and there's terrorism and escalation of violence," said Alan Ackerman, market strategist with brokerage Fahnestock & Co.. "People don't want to put money to work and money remains sidelined ... the weakness of the dollar has not encouraged foreign investors to put money in our market."
Stocks fell through technical support levels, where buyers are expected to swoop in. The level for the Dow were at 9,380 and the S&P support level was at 1,000, according to research firm Schaeffer's Investment Research. The Nasdaq held above its support level at 1,425.
The levels are key elements of technical analysis, which studies prices, volume and charts.
A big break below support opens the way for more declines, traders say.
About 1.94 billion shares traded on Nasdaq and 1.82 billion changed hands on the New York Stock Exchange. About 17 stocks fell for every 16 that gained on the Nasdaq, and about 18 stocks fell for every 13 that rose on the Big Board.
The Russell 2000 index rose 0.82 to 461.07, a sign that small-cap stocks were holding up better than their large-cap counterparts. The index advanced 0.4 percent for the week.
Overseas, Japan's Nikkei stock average fell 2.4 percent. In Europe, Germany's DAX index lost 0.3 percent, Britain's FTSE 100 was up 0.6 percent, and France's CAC-40 dropped 0.9 percent.
Reuters and the Associated Press contributed to this report.