Wall St. sits tight
Largely un-rattled by Enron, confidence data and military rumors, stocks end flat.
February 26, 2002: 4:53 p.m. ET
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NEW YORK (CNN/Money) - U.S. stocks stabilized Tuesday, erasing just a fraction of a two-session surge, after a federal hearing on Enron's collapse did nothing to revive broader worries about the credibility of corporate accounting.
A surprisingly weak reading on consumer confidence and false rumors about U.S. military action in Iraq also failed to significantly damage the markets, which have gained amid recent hints of improving corporate profits. The Dow Jones industrial average clung to its advance for the year while the Nasdaq composite index ended nearly flat. As for breadth, more stocks rose than fell.
The Dow industrials shed 30.45 points, or 0.3 percent, to 10,115.26, narrowing its 2002 gain to 0.9 percent. The Nasdaq lost 3.02, or 0.2 percent, to 1,766.89, widening this year's loss to 9.4 percent.
The Standard & Poor's 500 index dipped 0.3 to 1,109.40, down 3.4 percent on the year.
The cloud of the Enron debacle rose again as senators investigating the biggest bankruptcy in U.S. history peppered former CEO Jeffrey Skilling and two current executives of the energy trader with questions.
But stocks gained just after the hearings concluded with no new information on how the company masked its losses from so many for so long.
"These hearings have an impact on investor psychology, they make people nervous, and that's why we're having a rally at the close," Ken Tower, technical analyst at CyberTrader, told CNNfn's Street Sweep.
Wednesday brings another potential market-moving event: Federal Reserve Chairman Alan Greenspan speaks before a House panel, where he'll discuss the U.S. economy for the first time in a month.
On the New York Stock Exchange, winning shares topped losing ones more than 9-to-7 as nearly 1.3 billion shares traded. Nasdaq advancers edged decliners 9-to-8 as 1.6 billion shares changed hands.
In other markets, Treasury securities fell. The dollar rose against the yen and euro. Oil and gold prices advanced.
Skilling's grilling
In Washington, a Senate Commerce panel resumed its Enron hearings with Skilling testifying alongside Sherron Watkins, a company vice president who said top executives knew of the financial problems that caused its collapse.
Skilling, who left Enron in August for what were described as personal reasons, denied that he has lied in previous testimony about his awareness of the company's financial woes.
"I did not leave the company because I thought the company was in imminent financial danger," said he said.
The hearings come as investors are quick to punish companies with questionable financial statements. But the latest apparent casualty, Hanover Compressor (HC: up $1.92 to $16.02, Research, Estimates), saw its stock gain after the natural gas company said it will downwardly restate financial results.
Still, Ned Riley chief investment strategist at State Street Global Advisors said it may take months for the market to get past worries about the accuracy of corporate financial reports.
"The Enron hearings aren't going to help a lot," Riley told CNNfn's Market Call.
Stocks, which opened higher, fell immediately after the Conference Board said its index of consumer sentiment fell to 94.1 in February from a revised 97.8 in January, well below economists' expectations of 97.
Some also linked the early losses to a false rumor that U.S. troops landed in Iraq, a country President Bush said was among those in an "axis of evil" last month.
As for consumer confidence, since tumbling after the Sept. 11 terrorist attacks, sentiment had been climbing as the stock market stabilized and the pace of corporate layoffs fell.
But Tuesday's data, a survey of 5,000 households, showed a reversal following two monthly gains, reflecting concerns about the job market, the Conference Board said.
The number of people reporting that jobs were plentiful fell while those saying jobs were "hard to get" rose -- less than two weeks before the government is expected to report a rise in February's unemployment rate.
The Dow's biggest gainers, Wal-Mart (WMT: up $1.45 to $62.10, Research, Estimates) and United Technologies (UTX: up $1.75 to $71.80, Research, Estimates), partially offset some of the losses in 3M (MMM: down $1.15 to $119.30, Research, Estimates) and Procter & Gamble (PG: down $0.87 to $86.50, Research, Estimates).
But gains continued for server maker Sun Microsystems (SUNW: up $0.14 to $9.01, Research, Estimates), which enjoyed a brokerage upgrade Monday.
Flextronics International (FLEX: down $0.94 to $15.05, Research, Estimates), an electronics manufacturer, warned that current-quarter profits will fall short of expectations. Nasdaq's biggest loser, videoconferencing company MCSi (MCSI: down $6.95 to $10.40, Research, Estimates), said it lost money in the latest quarter after reporting a year-earlier profit.
Home Depot (HD: Research, Estimates) served up the latest good news in the retail sector, saying fourth-quarter profit rose above forecasts -- a day after home improvement rival Lowe's upped its current-quarter earnings guidance.
Another retailer, Federated Department Stores (FD: up $2.64 to $41.66, Research, Estimates), which runs Bloomingdale's and Macy's, said fourth-quarter operating income fell to $1.90 a share, which nevertheless topped forecasts.
Looking ahead to Greenspan
But Wall Street may need more good news to build on the Dow Jones industrial average's 321-point gain that occurred over Friday and Monday. Helped by upbeat forecasts from General Motors and Eastman Kodak, the Dow industrials wiped out their losses for the year with Monday's advance.
"Rallies have been suspect until proven otherwise," Bryan Piskorowski, market commentator at Prudential Financial, told CNNfn's Before Hours. "You have to see a few more days to see a trend building."
Looking ahead, Fed Chairman Greenspan addresses a House panel on the U.S. economy on Wednesday.
Since Greenspan appeared before senators a month ago, data have shown that the housing market remains strong, new claims for unemployment benefits are falling and inflation is modest.
But on Wednesday the Fed chief likely will make a cautiously optimistic assessment, signaling that while interest rates may not go any lower, they are unlikely to head higher anytime soon. Central bankers cut short-term borrowing costs 11 times last year. 
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