Stocks Finish Solidly Lower

Earnings and accounting concerns dominated the markets. Plus, oil prices fell after Iraq resumed exports

Concerns about valuations and accounting issues continued to haunt the stock market, prompting the major averages to finish lower on Monday.

Accounting worries again bubbled to the surface after once-highflying software concern Peregrine Systems (PRGN ) said it is investigating possible improperly booked revenue totaling $100 million. Both the CEO and CFO have left the company as the stock has lost over half its value on Monday. Elsewhere, Deutsche Bank reiterated a cautious tone over the semiconductor sector.

Meanwhile in Houston, the first criminal case to emerge from the collapse of energy trader Enron will be in the spotlight in the coming weeks as Arthur Andersen went on trial for allegedly obstructing justice by shredding volumes of Enron-related documents. Jury selection began Monday in Houston federal court.

Andersen and Enron aside, much of Monday's market was dominated by negative news from the technology sector. Computer Network Technology (CMNT ) said it sees a $0.10-$0.15 loss per share from continuing operations on $45 million in revenue, below estimates. It cited soft information technology (IT) spending and project delays.

And BMC Software (BMC ) reported $0.12 fiscal fourth quarter earnings per share from operations on 22% lower total revenue. The company sees EPS of $0.07-$0.09 for the first quarter and $0.46-$0.52 for all of fiscal 2003.

The Dow Jones industrial average closed down 198.59 points, or 1.98%, to 9,808.04. Meanwhile, the Nasdaq Composite was off 34.55 points, or 2.14%, to 1,578.48. The broader Standard & Poor's 500 index shed 21.20 points, or 1.98%, to 1,052.23.

Among the sectors seeing selling pressure were aerospace/ defense, aluminum, utilities and household appliances. Plus, energy futures and related stocks were down after Iraq said it would resume exports after a month-long moratorium, and as the Israeli-Palestinian crisis calmed down a bit. Integrated oil giant ExxonMobil (XOM ) was a major Dow loser. Oil futures were off Monday, trading around $26 a barrel.

Though the bulk of quarterly earnings news is behind investors, Cisco (CSCO ) is slated to report results Tuesday afternoon. The world's biggest networking company is expected to shed light on business demand for networking gear and tech services, according to wire reports. A Thomson Financial/First Call poll of analysts calls for the company to report earnings of $0.09 a share on revenue of $4.86 billion. Cisco shares advanced $0.37 to $13.51 in Monday's session.

Elsewhere in the tech sector, the newly merged Hewlett-Packard and Compaq traded as (HPQ ) on the New York Stock Exchange. The new shares gained more than 4%.

And in entertainment news, "Spider-Man," the latest comic-book superhero to wind up in a feature film, swung into North American box office history with a record-smashing $114 million haul from its first three days of release, studio executives said on Sunday, according to wire reports. Shares of Sony (SNE ), whose unit Columbia Pictures released the movie, finished relatively unchanged.

Treasury Market

U.S. Treasuries ended lower, with some profit taking ahead of Tuesday's FOMC meeting. Chances for a rate hike Tuesday are basically slim-to-none, while most also expect the FOMC to maintain its balanced assessment of the risks facing the economy, according to S&P. Meanwhile, no major economic reports were released Monday.

World Markets

European markets finished mixed. In London, the markets were closed for a bank holiday. On Friday, the Financial Times-Stock Exchange 100 index gained 29 points, or 0.56%, to 5,203.10. On Monday in France, the CAC 40 closed up 12.34 points, or 0.28%, to 4,367.26. In Germany, the DAX Index slipped 2.10 points, or 0.04%, to 4,880.67, while an engineering workers strike has pressured automaker Daimler-Chrysler. It's the first big strike in Germany since 1995.

In Asia, the markets ended lower. The Nikkei was closed Monday for Children's Day, but on Friday slipped 1.78 points, or 0.02%, to 11,551.01. In Hong Kong Monday, the market lost 61.02 points, or 0.52%, to 11,736.20.

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