Stocks Higher Friday Despite News Of Improper Accounting At Xerox

'We know there are problems in some corporations in America. So this is more bad news, but not new bad news,' said Arthur Hogan, chief market analyst at Jefferies and Co.

Investors also shrugged off a decline in consumer spending for May, largely because it was a smaller-than-expected decrease.

In late morning trading, the Dow Jones industrial average was up 53.09, or 0.6 percent, at 9,323.01, after rising 149.81 Thursday.

The broader market was also higher. The Nasdaq composite index rose 16.90, or 1.2 percent, to 1,476.10, having gained 29.87 Thursday. The Standard and Poor's 500 index advanced 7.98, or 0.8 percent, to 998.62, having advanced 17.11 Thursday.

The market's upturn came despite news that Xerox had improperly recorded $3 in revenue from 1997 through 2000, and that it will restate as much as $2 billion in earnings for those years.

While Xerox fell $1.21 to $6.79, it did not cause the market to falter. Analysts say that accounting scandals have been factored into the market's prices following a string of fiascoes beginning with Enron's collapse in December and including a $3.8 billion scandal this past week at WorldCom.

Xerox's problems are also not surprising. In April, the SEC said accounting improprieties increased profits by $1.5 billion from 1997 through 2000. Xerox is paying a $10 million civil penalty.

The market's gains also followed a Commerce Department report saying consumer spending slipped 0.1 percent in May, although that beat analysts' expectations for a 0.2 percent decline. Consumer spending is closely watched on Wall Street because it accounts for two-thirds of the economy.

Among Friday's winners, General Motors rose $1.34 to $52.84, recouping much of the $1.58 it lost Thursday amid rumors _ denied by GM _ of irregular accounting.

Electronic Data Systems rose 90 cents to $38.20, recovering some losses from Thursday when investors were worried about its exposure to WorldCom, which is a customer.

WorldCom disclosed late Tuesday that it had disguised $3.8 billion in expenses, meaning it may have been losing millions as it reported profits. WorldCom stock has not opened for trading since that announcement.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Volume came to 446.16 million shares, below 480.46 million traded at the same point Thursday.

The Russell 2000 index, the barometer of smaller company stocks, rose 3.23, or 0.7 percent, to 461.95.

Overseas, Japan's Nikkei stock average finished Friday up 3.5 percent. In afternoon trading in Europe, Germany's DAX index was up 2.1 percent, France's CAC-40 climbed 2.9 percent, and Britain's FTSE 100 rose 2.2 percent.

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