NEW YORK, Feb 16: Stocks fell on Friday as jitters about corporate accounting flared up after reports on companies ranging from International Business Machines Corp. to graphics chip maker Nvidia Corp., but bonds rallied on downbeat US economic data.

The dollar rose, and oil prices closed higher as the United States turned up the rhetoric against Iran and Iraq, two major oil producers.

Accounting and bookkeeping and finance ... are the raw material for Wall Street, said Michael Vogelzang, president of Boston Advisors Inc., with more than $1 billion in assets. If the confidence in those numbers goes away or weakens, you’re going to see prices go down.

Traders headed to the sidelines ahead of a three-day holiday weekend — financial markets are shut on Monday for the Presidents Day holiday. Investors are bailing out of stocks at the first hint of impropriety after a rash of accounting scandals that began with bankrupt energy trader Enron Corp.

Consumers reined in their optimism in early February as stocks stumbled while US factory output dipped in January, according to reports that hinted a recovery from recession may be slow and arduous. The data came as a letdown after reports earlier this week showed a surge in January retail sales, minus cars, and a drop in weekly jobless claims.

I think we have another month or so of this sloppy market, said Jeff Kleintop, chief investment strategist at PNC Advisors, which oversees $65 billion. One day people will be excited about the economy, and the other day they will be concerned about further accounting issues. It’s almost a bi-polar market.

The blue-chip Dow Jones industrial average fell 98.95 points, or 0.99 per cent, to 9,903.04. The Dow fell below the 10,000 mark after ending on Thursday above the key level for the first time since mid-January.

The technology-packed Nasdaq Composite Index tumbled 38.18 points, or 2.07 per cent, to 1,805.19, ending lower for the third week in a row. The broad Standard & Poor’s 500 Index dropped 12.30 points, or 1.10 per cent, to 1,104.18.

For the week, the Dow rose 1.6 per cent, the best week so far this year, and the S&P 500 added 0.7 per cent. But the Nasdaq composite dropped 0.75 per cent.

Winners matched losers on the New York Stock Exchange, but declining stocks outnumbered advancers by 10 to 7 on Nasdaq. More than 1.35 billion shares traded on the Big Board, and more than 1.6 billion on Nasdaq. Volume was lighter than average daily amounts logged on the exchanges in January.

IBM slumped $5 to $102.89, dragging on the Dow. The computer giant came under scrutiny after The New York Times reported the company hadn’t disclosed a $300 million gain on the sale of an optical unit, but that it was this gain that enabled IBM to meet fourth-quarter earnings estimates.

An IBM spokeswoman said the company had adequately disclosed the sale of the unit through two press releases from Canada’s JDS Uniphase Corp., which had bought the unit.

Computer graphics chipmaker Nvidia fell $4.81 to $57.35. The company was stung when it announced an internal investigation after a Securities and Exchange Commission inquiry. Nvidia was the best performer in the S&P 500 index last year, a distinction it inherited from Enron, the index’s best performer of 2000.—Reuters