Wall Street report: Tuesday close

FEDERAL Reserve chairman Alan Greenspan, like President George W. Bush a week ago, failed to pull Wall Street out of its dive. The Dow Jones Industrial Average finished the day down 166.08 points or 1.92% to 8473.11, its seventh straight losing session. The Nasdaq Index lost 7.36 points or 0.53% to 1375.26.

Investors had been looking to Greenspan, who has moved markets in the past with his carefully-phrased remarks, to calm nerves after one of the most punishing bear markets in US history. The Dow has plunged roughly 14% this year, while the Nasdaq has dropped nearly 30%.

In testimony to Congress, Greenspan did his best to nurture hopes that the economy will continue its recovery, despite recent accounting scandals. 'The effects of the recent difficulties will linger for a bit longer, but as they wear off, and absent of significant further adverse shocks, the US economy is poised to resume a pattern of sustainable growth,' Greenspan said.

He called for a crack-down on corporate fraud - 'an infectious greed (which) seemed to grip much of our business community,' he said. 'The highly desirable spread of shareholding and options among business managers perversely created incentives to artificially inflate reported earnings in order to keep stock prices high and rising.'

Investors did seem to draw some strength from Greenspan's assertion that profits should improve with the economic recovery, but only for an hour or two. The Dow erased most of a 230-point loss while Greenspan was speaking before late afternoon selling dragged markets lower yet again.

The sell-off was broad, with company-specfic news triggering major moves. Conglomerate Tyco International, one of the companies caught up in the accounting imbroglio, plunged $1.67 or 12% to $12.81, down from $60 in January, after Goldman Sachs cut the company from its 'recommended list.'

Goldman, a key adviser to Tyco, had been behind a plan announced in January to split Tyco into four. The plan was abandoned in April. Goldman said new and renewed official investigations into Tyco's activities were responsible for the negative call.

Embattled telecoms group WorldCom gave up 1.6 cents or 14% to 9.9 cents after it said it would miss a $74m bond payment this week. Lenders to WorldCom were marked down, with JP Morgan off $1.58 or 5.3% to $28.50, and Citigroup down 74 cents or 2% to $36.20.

Pharmaceuticals maker Merck, which has also unnerved markets with its accounting policies, dipped $1.69 or 4% to $43.01.

Heavy equipment maker Caterpillar, a component of the Dow, dropped $2.19 or 5% to $43 after it offered a cautious outlook.

Intel, marked down 76 cents or 4% to $18.36, reported after the close of trading that its earnings had fallen nearly 20% short of forecasts. Intel shares were selling at $18.22 in after-hours trading.

Among Dow components, 3M slid $2.99 or 2.5% to $115.90, Walt Disney fell 33 cents or 1.8% to $17.65 and Wal-Mart came off $3.56 or 7% to $49.88.

Nextel, the fifth biggest US wireless company, jumped $1.53 or 31% to $6.53 after its quarterly results beat expectations.