NEW YORK, Aug 24: Stocks fell on Friday as high-profile investigations reignited fears of more corporate misconduct, prompting investors to book profits from the recent rally. But the broad market managed to log its fifth straight week of gains for the first time in two years.

Raising some governance issues again seems to be the thing that has spooked the market more than anything else, said Jeff Kleintop, chief investment adviser at PNC Advisors.

Worries about shady corporate dealings had faded somewhat since the scandals surrounding energy trader Enron Corp. and WorldCom Inc. sent stocks into a tailspin, but developing inquiries hit Citigroup Inc. and AOL Time Warner Inc.. Citigroup fell 3.3 per cent and AOL 9.3 per cent.

Wall Street was largely unscathed by the Aug. 14 deadline for executives at hundreds of big companies to swear their financial statements were accurate, but we know it’s not all behind us, Kleintop said.

Chip equipment stocks were hit by fears that budget cuts by Taiwan chip makers could stall a recovery in the sector and a Wall Street analyst’s downbeat call on a range of chip-related firms. Leader Applied Materials lost 6.7 per cent.

The Dow Jones industrial average lost 180.68 points, or 2 per cent, at 8,872.96, according to the latest available data. It was the Dow’s fifth straight up week in a row. The broader S&P fell 21.84 points, or 2.27 per cent, to 940.86. The tech-laced Nasdaq Composite lost 42.33 points, or 2.97 per cent, to 1,380.62. It was Nasdaq’s third consecutive week of increases.

For the week, the Nasdaq gained 1.4 per cent, the Dow rose 1.1 per cent and the S&P 500 added 1.3 per cent.

It’s a real slow kind of market, the Dow broke 9,000 so there may be a bit of profit-taking, said Robert Basel, a senior trader at Salomon Smith Barney. There was also news of a security scare at LaGuardia...and that also impacted us.

Chip equipment stocks fell after Banc of America Securities slashed its estimates on a range of companies in the sector, saying the earnings potential of these companies would be hurt by weaker-than-expected semiconductor capital spending.

The Philadelphia Stock Exchange’s semiconductor index fell 5.9 per cent. It reflected losses in issues such as Applied Materials, which sank $1.09 to $15.08 on Nasdaq.

Citigroup was under the microscope after a newspaper report that New York State’s attorney general has widened his probe of Citigroup’s brokerage unit.

The Wall Street Journal, citing unnamed sources familiar with the matter, said New York Attorney General Eliot Spitzer is looking into a lucrative financing deal and what role Citigroup Chief Executive Sanford Weill might have played.

Spitzer is investigating whether Weill might have pressured Jack Grubman, then a telecommunications analyst at Citigroup’s Salomon Smith Barney unit, into raising his rating on AT&T Corp. to win a spot underwriting the stock offering for AT&T’s wireless business.

AT&T said it had received a subpoena from Spitzer’s office related to that initial public offering.

A Salomon Smith Barney spokeswoman told Reuters that Weill never told any analyst what to write.

Citigroup’s shares fell $1.18 to $34, while AT&T dropped 16 cents to $12.22, both pressuring the Dow.

AOL Time Warner Inc. was also a subject of investor scrutiny amid fears the world’s largest media company may take another large write-down of its assets. It was also hurt by reports regulators may widen their probe into the firm’s finances. AOL sagged $1.31 at $12.76, having hit a session low of $12.55.—Reuters