Stocks mixed
on heavy volume

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By Amy Baldwin
Associated Press

NEW YORK >> Wall Street ended a truly terrible quarter with a whimper today 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 tomorrow, 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 smaller than expected.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange on heavy volume. The Dow Jones industrial average closed down 26.66, or 0.3 percent, at 9,243.26. 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 Russell 2000 index gained 3.94, or 0.9 percent, to 462.66.

But 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.

The price of the Treasury's 10-year note was up 3/16 point today, while its yield fell to 4.80 percent from 4.82 percent late yesterday. Two-year Treasury notes gained 1/16 point and yielded 2.79 percent, up from 2.82 percent yesterday.

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.

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

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

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 yesterday.

Overseas, Japan's Nikkei stock average finished 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.