U.S. stocks completed their steepest first-half decline in more than three decades, reflecting concern a rebound in profits is slowing and investor doubts over companies' accounting.
Volume on the New York Stock Exchange was 2.6 billion shares, making it one of the busiest sessions in history.
The Dow Jones industrial average and the Standard & Poor's 500 Index slid yesterday, erasing early gains in the busiest day in nine months.
Xerox Corp. fell after it restated five years of revenue. That followed by three days WorldCom Inc.'s statement that it hid almost $4 billion in costs.
"There is no catalyst that can spark a major rally," said Stanley Nabi, who helps oversee $57 billion at Credit Suisse Asset Management.
The S&P; 500 fell 0.82, or 0.1 percent, to 989.82. Health-care stocks such as Pfizer Inc. were the biggest drag on the index, while telephone shares such as AT&T; Corp. added the most. The benchmark has lost 13.8 percent this year, the largest first-half drop since 1970.
The Dow fell 26.66, or 0.3 percent, to 9,243.26. The average is down 7.8 percent in 2002.
The Nasdaq Composite Index gained 4.01, or 0.3 percent, to 1,463.21, trimming its year-to-date loss to 25 percent.
For the week, the S&P; 500 rose less than 0.1 percent while the Dow slipped 0.1 percent and the Nasdaq rose 1.7 percent.
Elsewhere on the broad market, the Russell 2000 index, a benchmark of small-cap stocks, rose 3.94 points to 462.66, and the Wilshire 5000 rose 10.79 to 9,384.
The Sun-Bloomberg index of the top stocks in Maryland gained 1.90 points to 200.26.
Nearly two stocks rose for every one that fell on the New York Stock Exchange, while three advanced for every two that declined on the Nasdaq market.
Xerox slid $1.03, or 13 percent, to $6.97. The company inflated revenue by $1.9 billion over the past five years by misreporting the timing and makeup of equipment sales. The Securities and Exchange Commission fined the company a record $10 million in April because of the false reporting of about $3 billion in sales.
Eli Lilly & Co. fell $3.43 to $56.40 after Lehman Brothers analyst Anthony Butler said the company has had problems "at several of its manufacturing facilities," which could hurt profit growth next year. Butler cut the drug maker to "buy" from "strong buy."
Other drug shares also declined. Pfizer lost $1.75 to $35, Johnson & Johnson dropped $2.15 to $52.26, Abbott Laboratories fell $1.50 to $37.65, and Wyeth shed $1.48 to $51.20.
Nike Inc. gained $2.23 to $53.65. The company said fourth-quarter profit increased 28 percent as it discounted fewer items. The world's largest maker of athletic shoes said fourth-quarter profit was 77 cents a share, beating the 75-cent average estimate of analysts polled by Thomson Financial/First Call.
Media stocks recouped losses incurred on concern that a wave of mergers in recent years left the debt-laden companies susceptible to new scrutiny of their accounting after the WorldCom disclosure.
Clear Channel Communications Inc., the largest radio-station operator, rallied 82 cents to $32.02. Viacom Inc., owner of the CBS and MTV television networks, rose $2.79 to $44.46, and AOL Time Warner Inc., the largest media conglomerate, rose $1.08 to $14.71.
Basic-materials stocks such as International Paper Co. gained as investors bet on companies whose business rises most in an expanding economy.
Stocks were bolstered after the University of Michigan reported that its consumer confidence index for June declined less than expected, to 92.4 from 96.9 last month. A preliminary report showed a drop to 90.8.
While a Commerce Department report showed U.S. consumer spending dropped 0.1 percent in May, reports earlier this week showed the economy grew more than forecast in the first quarter. Leading economic indicators and home sales also gained more than expected.
"The underlying economic story is OK," said Elizabeth Miller, who helps oversee $750 million at Trevor Stewart Burton & Jacobsen Inc. "The market should certainly follow."
Alcan Inc. rose $1.08 to $37.52. The world's second-biggest aluminum maker expects second-quarter profit at the upper end of its range of 35 cents to 45 cents a share. Larger rival Alcoa Inc. gained $1.17 to $33.15.
All 13 members in the Philadelphia Forest & Paper Products Index rose. International Paper climbed $1.26 to $43.58, Temple-Inland Inc. advanced $1.27 to $57.86, and Weyerhaeuser Co. gained 89 cents to $63.85.
AT&T; had the biggest gain in the Dow, rising 80 cents, or 8.1 percent, to $10.70, and Sprint Corp. surged $1.01 to $10.61. Both stand to gain customers from WorldCom.
SBC Communications Inc. rose 35 cents to $30.50. The second-largest U.S. long-distance company is selling its 20 percent stake in Bell Canada to BCE Inc. for $4.17 billion. SBC said it has lowered its short-term debt to less than $6 billion.
Overseas, Japan's Nikkei stock average finished yesterday up 3.5 percent; 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.