Wall Street: Thursday close

DOUBTS about the integrity of American company accounting sent Wall Street tumbling as two of world's biggest companies became entangled in the 'Enron effect.'

General Electric, the world's richest company by market value, nosedived $3.45 or 9.3% to $33.75 after its numbers came up short. The reason for the shortfall was blamed on an adjustment in the way GE accounted for companies it had bought, a controversial method which critics claimed had helped it turn in results just above analyst expectations quarter after quarter.

And IBM, once a contender for the crown of the world's biggest company, dropped $4.82 or 5.4% to $84.19 after a newsletter reported that the Securities and Exchange Commission had started an investigation into its bookkeeping on February 15.

The combined drop in GE and IBM shares helped drive the Dow Jones Industrial Average down 205.65 points or 1.98% to 10,176.08. The Nasdaq Index slid 41.79 points or 2.37% to 1,725.28. The selling erased gains of Wednesday when the Dow popped 1.7% and the Nasdaq climbed 1.4%.

Once mighty Xerox, the copier company, added to accounting woes when it agreed to pay $10m. to settle allegations it defrauded its investors by artificially boosting profits by $1.5bn. from 1997 through 2000. Xerox shares, at $60 in 1999, lost 24 cents or 2.4% to $9.70.

And giant broker Merrill Lynch was knocked down $4.02 or 8% to $46.90 on accusations its misled investors investing in Internet companies.

Analysts said the GE disappointment also played into doubts about whether the US economy is recovering sufficiently to boost company profits. GE, which makes everything from refigerators to aircraft engines, is sometimes regarded as a proxy for the economy as a whole and its lack of sales growth concerned some economists worried about 'stagflation' - a stagnant economy accompanied by inflation. The latter became more of a concern after Washington reported that import prices in March rose 1.1%, the biggest gain since September 2000, partly due to a sharp jump in petroleum prices.

One bright spot came from Wal-Mart, the world's biggest retailer, which said that its sales rose 9.5% last month, although some analysts attributed that to thriftiness on the part of consumers switiching away from higher-priced outlets. But Wal-Mart shares surrendered an early gain in the broad sell-off to close down 40 cents or 0.7% to $60.17.

Internet portal Yahoo! fell $2.99 or 16% to $15.45 as its quarterly losses widened and it suffered at least one broker downgrade. Internet peer Amazon.com lost 36 cents or 2.7% to $13.20.

Siebel Systems dropped $1.77 or 7% to $23.67 after CSFB cut its price targets for the software maker. Microsoft was marked down $1.51 cents or 2.7% to $54.79.

Among Dow components, General Motors eased 60 cents or 1% to $61.88, Alcoa, AT&T dipped $1.15 or 8% to $13.27 in a weak telecom sector, Citigroup slid $1.87 or 4% to $46.76 and ExxonMobil gave back 78 cents or 1.8% to $42.40.