Standard & Poor's 500 has biggest loss since Aug. 5

US stocks tumbled, driving the Standard & Poor's 500 Index to its biggest loss in almost three weeks. Intel Corp led the decline after analysts said spending on computers and semiconductors will remain sluggish.

A sputtering economy may end the rally that sent the S&P 500 to a fifth-straight winning week, the benchmark's longest streak in two years, some investors said.

"There is still a legitimate concern about earnings and the strength of the economic recovery," said David Spika, a senior portfolio manager at Banc of America Capital Management, which oversees US$288 billion in St. Louis.

Citigroup Inc dropped as some investors said Chief Executive Officer Sanford Weill may be tainted by a probe into the largest financial-services company's securities research. AOL Time Warner Inc fell on concern its accounting doesn't properly reflect the media company's financial state.

The S&P 500 shed 21.84, or 2.3 percent, to 940.86, its biggest decline since Aug. 5. Computer-related and financial shares contributed more than one-third of the loss. The Dow Jones Industrial Average dipped 180.68, or 2 percent, to 8,872.96. The NASDAQ Composite Index dropped 42.33, or 3 percent, to 1,380.62.

For the week, the S&P 500 climbed 1.3 percent. It hadn't gained in five consecutive weeks since Aug. 4-Sept. 1, 2000. The Dow rose 1.1 percent and the NASDAQ 1.4 percent this week.

Two stocks fell for every one that rose today on the New York Stock Exchange and the NASDAQ Stock Market. Some 1.06 billion shares traded on the Big Board, one-third less than the three-month daily average.

The S&P 500's 18 percent rally from a five-year low July 23 has reflected growing optimism that the economy is improving and that the worst accounting and corporate-governance scandals are past, said James Luke, who helps oversee US$10 billion at BB&T Asset Management in Raleigh, North Carolina.

Accounting issues have "become less and less important," Luke said. "More and more important is the sustainability of the economic expansion and earnings. And I think the economy gets better."

New information about investigations of Citigroup and AOL Time Warner may have revived some fears today, Luke said, especially because of the prominence of Weill's company, the sixth-biggest in the S&P 500.

Citigroup fell US$1.18 to US$34. New York's attorney general, Eliot Spitzer, is examining whether former Salomon Smith Barney Inc. analyst Jack Grubman was pressured to raise his rating on AT&T Corp to win a role when the phone company sold US$10.6 billion in shares of AT&T Wireless Services Inc.

AT&T said it received a subpoena from Spitzer's office. A Citigroup spokeswoman said that Weill didn't influence Grubman's recommendations.

Shares of AT&T fell US$0.16 to US$12.22, snapping a four-day advance. AT&T Wireless dropped US$0.31 to US$5.68.

AOL Time Warner slipped US$1.31 to US$12.76. The New York Times said the SEC is examining the possibility that swap transactions AOL did with Qwest Communications International Inc. and WorldCom Inc. may have inflated AOL's revenue.

The Financial Times said, without citing anyone, that the SEC will examine positive earnings forecasts made by AOL while executives were selling stock. Even with today's loss, AOL shares are up 32 percent from their low last month.

Intel, the biggest maker of computer microprocessors, dropped US$1.19 to US$17.96, and Applied Materials Inc, the biggest maker of chip equipment, dropped US$1.09 to US$15.08. The Philadelphia Semiconductor Index lost 5.9 percent as all 17 member companies fell.