Indexes hit
multi-year lows

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By Hope Yen
Associated Press

NEW YORK >> Wall Street's malaise deepened today, with stocks falling on a confluence of factors that included disappointing earnings news and a criminal investigation into Xerox's accounting practices. The Dow Jones industrials dropped nearly 190 points to hit a four-year low.

Growing concerns about a possible war with Iraq exacerbated the selling, and the Federal Reserve's decision to leave rates unchanged did little to lift the market's spirits.

"It's still not a great environment," said Charles White, portfolio manager at Avatar Associates. "There's still a wave of sentiment out there where people are disgusted and throwing in the towel."

Declining issues outnumbered advancers 9 to 4 on the New York Stock Exchange. Volume was moderate.

The Dow Jones industrial average fell 189.02, or 2.4 percent, to close at 7,683.13. The blue chips registered their fourth triple-digit loss in six sessions to reach a four-year low, last seen on July 23.

The broader market also finished lower. The Nasdaq composite index dropped 2.79, or 0.2 percent, to 1,182.14, to set a new six-year low after reaching it yesterday. The Standard & Poor's 500 index was down 14.43, or 1.7 percent, at 819.27. The Russell 2000 index fell 2.11, or 0.6 percent, to 356.57.

The price of the Treasury's 10-year note was up 1/2 point today, while its yield fell to 3.63 percent from 3.70 percent late yesterday. Two-year Treasury notes were up 1/32 point and yielded 1.87 percent, down from 1.89 percent yesterday.

The Fed's Open Market Committee chose to leave rates at 40-year lows at its meeting today, saying consumer and business demand is "growing at a moderate pace." But it also noted considerable uncertainty remains about the timing and strength of a recovery.

Investors have been focused on the strength of the recovery and had little optimism before the Fed's meeting.

Stocks got an initial lift after the New York-based Conference Board said its Consumer Confidence Index fell to 93.3 in September. It was the fourth straight month of decline, but the index beat analysts' forecasts of 92.4.

Tech stocks managed to fare better than blue chips. "A lack of Nasdaq-specific bad news is helping, although it isn't necessarily a great reason to buy stocks," said Jack Caffrey, equities strategist J.P. Morgan. "In the last several weeks, volume has been low, which we take as a lack of conviction."

Decliners included Xerox, which fell 71 cents to $5.96 after the company said federal prosecutors were opening a criminal inquiry into the company's accounting practices.

Weyerhaeuser fell $5.98 to $43.75, after the paper company said it expected third-quarter earnings to fall below expectations because of weak lumber prices. The news dragged down International Paper, a Dow component, which dropped $2.21 to $31.94.

The airline sector also took a hit. UAL's United Airlines fell 22 cents to $2.12, while AMR Corp.'s American Airlines dropped 62 cents to $3.60.

Gainers included Goldman Sachs, which climbed 64 cents to $66.31, after the investment bank reported third-quarter earnings that beat expectations by a penny.

Overseas, Japan's Nikkei stock average finished lower 1.7 percent. In Europe, France's CAC-40 fell 1.8 percent, Britain's FTSE 100 declined 1.8 percent, and in late afternoon trading, Germany's DAX index was down 1.4 percent.