Wall St. in audit mode

February 20, 2002 Posted: 1353 GMT

NEW YORK (CNN/Money) -- New accounting questions about Computer Associates and a downgrade of AOL Time Warner looked unable to crush the U.S. stock market any further before trading began Wednesday, with the major indexes already at or near their lowest levels of the year.

The latest economic data showed inflation remains contained.

Early indications point to a modestly higher opening for the major U.S. stock indexes, which suffered mightily Tuesday on the accounting woes that blossomed in the wake of the collapse of energy trader Enron. In particular, a newspaper story about changes in IBM's disclosure practices sent shares of Big Blue and other stocks in the technology sector sharply lower.

Computer Associates' (CA: Research, Estimates)  shares tumbled $3.05 to $22.26 before hours Wednesday after the Long Island, N.Y.-based newspaper Newsday reported that federal authorities are investigating whether the software maker violated criminal fraud laws through its accounting practices. In a statement, CA said it knows of no investigation.

AOL Time Warner (AOL: Research, Estimates) fell $1.01 to $24.51 before hours. The media conglomerate that's the parent of CNN/Money was downgraded by Lehman Bros. to "market perform" from "buy" because of concern about its online services division.

In other accounting news, the Wall Street Journal said General Electric  -- like IBM -- plans to offer more detail in its financial reports, particularly about the GE Capital financial services unit. GE shares fell 71 cents to $36.40 in Tuesday's U.S. trading.

The Consumer Price index rose 0.2 percent in January, the government said Wednesday, matching forecasts. Stripping out food and energy, the CPI made an identical gain, as businesses facing sluggish demand cut prices to move goods.

"It's another in the long series of the no-news-is-good-news story about inflation," Bill Cheney, economist at John Hancock Financial Services, told CNNfn's Before Hours.

The Dow Jones industrial average starts at 9,745.14 following a 158-point drubbing Tuesday. The Nasdaq composite index begins at 1,750.61, its lowest close of the year, having lost more than 54 points, while the Standard & Poor's 500 is at 1,083.34 after a pounding of almost 21 points.

Asian stocks closed lower Wednesday, with Tokyo's Nikkei index down slightly. European markets were lower in midday trading.

Treasury prices edged lower, with the 10-year note yield rising to 4.89 percent from 4.87 percent Tuesday. The dollar rose against the euro and was flat versus the yen. Brent oil futures fell 31 cents to $20.21 a barrel. Gold was lower in London.

TMP Worldwide (TMPW: Research, Estimates) , which owns the Monster.com job recruitment sight, warned that first-quarter profit will miss forecasts by a wide mark. Shares fell $2.57 to $31.91 Tuesday.

But biotechnology firm Cephalon (CEPH: Research, Estimates) raised first-quarter profit guidance. Shares fell $1.39 to $58.61 Tuesday.

Diversified manufacturer Honeywell International (HON: Research, Estimates)  said it has named David M. Cote president and CEO, replacing Lawrence Bossidy. Cote  was president of TRW. Honeywell shed 99 cents to $32.65 Tuesday.