NEW YORK, July 9 (UPI) -- Stock prices on the New York Stock Exchange and the Nasdaq Stock Market were little changed in light trading at midday Tuesday as investors digested President George W. Bush's plans to battle corporate corruption.
The blue-chip Dow Jones industrial average, which dropped 104.60 points Monday, was ahead 7.00 points to 9,281.90. The tech-heavy Nasdaq composite index, which fell 42.75 points in the previous session, was ahead 1.41 points to 1,407.02.
The broader New York Stock Exchange composite index was down 1.28 to 524.04 while the Standard & Poor's 500 index was down 2.35 to 974.63.
The American Stock Exchange composite index was ahead 0.09 point to 884.60 while the Wilshire 5000 Index was down 1.12 to 9,197.44.
Big Board volume declined to an estimated 511.20 million shares from 786.20 million shares changing hands during the same period Monday.
President Bush pledged to "expose and punish acts of corruption."
In a speech on Wall Street, the president also announced plans to create a Corporate Fraud Task force that will oversee investigations of corporate fraud and the prosecution of corrupt business executives.
In addition to overseeing investigations and prosecutions of corporate fraud cases, the task force will also bolster interagency coordination of civil and criminal investigations.
The president will create the new Corporate Fraud Task Force with an executive order. This means the president can act on this aspect of the crackdown without seeking congressional approval.
In addition to creating the task force, Bush called for sharper penalties for executives who commit fraud. Among the proposals he made is doubling the maximum prison term for mail fraud and wire fraud to ten years.
The president also called on the U.S. Sentencing Commission to lengthen prison sentences handed down for criminal fraud committed by business executives.
Bush proposed that the Securities and Exchange Commission be given greater powers to freeze improper payments made to business executives.
To help the SEC do its job, Bush called on Congress to give the SEC $20 million in additional funding to hire 100 new investigators. The president also wants $100 million earmarked for the SEC so the agency can buy state-of-the-art technology and so that it can hire more enforcement officers.
If Congress backs the president on the new funding requests, it would represent a 20 percent boost in the SEC's fiscal year 2003 budget compared with its funding level in fiscal year 2002.
The president also called on corporate executives to act within the spirit of disclosure laws by outlining in plain English what their compensation packages are.
Bush also called on corporate compensation committees to crack down on the practice of having companies offer top executives loans from the corporate coffers, and he called on the nation's financial markets to require that a majority of a company's board of directors be independent.
The president also called on the stock markets to require that any publicly traded company receive shareholder approval before it gives business executives stock options.
Treasury Secretary Paul O'Neill said the Bush administration is determined that corporate executives who have abused shareholders' trust will be "brought to the bar of justice" and face punishment.
O'Neill said the president is "going to continue his work that he began back in March and close the loopholes and bring people who have abused their authority to the bar of justice and give them some significant time in jail."
A former top executive himself, O'Neill said he found it hard to understand that some corporate chieftains do not seem to understand the difference between right and wrong.
"We've got to make it much clearer for them because we're going to put people who abuse their authority and hurt shareholders and employees in jail where they belong," he said.
And, the Business Roundtable, a group of chief executive officers of major corporations, endorsed the SEC's new rule requiring top corporate officials to certify financial statements are accurate, as well as congressional legislation to tighten oversight of the accounting industry.
Meanwhile, technology issues came under some pressure after brokers at Salomon Smith Barney slashed their price target for bellwether chipmaker Intel Corp.
Brokers cut Dow component Intel to $27 from $45. The brokerage also cut earnings targets for the company for 2002 and 2003.
Meanwhile, brokers at Merrill Lynch issued a bearish note on the semiconductor equipment outlook, cutting their 2003 earnings estimate for the sector due to slower growth forecast from weak PC, consumer and information technology spending.
Merrill Lynch said it believes the "likelihood of a pause in semiconductor equipment orders in (the) second half of 2002 has significantly increased over the past several weeks," leading it to reduce estimates and rating on 13 stocks in the group.
Among the companies for which Merrill trimmed its estimates were Applied Materials, KLA-Tencor, Novellus Systems, with all three stocks downgraded to "buy" from "strong buy."
The brokerage firm also lowered its second-quarter revenue forecast for U.S. semiconductor stocks, forecasting a 5 percent year-over-year fall in aggregate revenue and a 2 percent drop sequentially in third quarter revenue, citing ongoing valuation concerns.
"The absence of a stronger-than-expected recovery and the resulting upward revisions to earnings is what has been pressuring stock prices," Merrill Lynch said.
And, Merrill Lynch chief U.S. strategist Richard Bernstein raised concerns about the outlook for a profit recovery, saying the firm's indicators suggest that the expectation an upswing in profit has turned "marginally more bearish."
"Although analysts are still raising more estimates than is typical, the momentum of those estimate revisions may have peaked, giving a more neutral reading than the indicator had during the past several months. We would not be surprised if top-down earnings forecasts are revised downward in the next several months despite an improving profit cycle," the note said.
Meanwhile, U.S. Treasury prices drifted lower. The 10-year bond slipped 6/32 to 100 13/32. Its yield, which moves in the opposite direction of its price, rose to 4.82 percent from 4.79 percent late Monday.
In Europe, stock prices ended lower in light trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index lost 63.6 points, or 1.38 percent, to 4,537.7. The German DAX index fell 35.81 points, or 0.81 percent, to 4,406.52 and the French CAC-40 index lost 39.34 points, or 1.02 percent, to 3,819.01.
Analysts said stocks were pressured by continuing worries over U.S. corporate and accounting practices, which put further pressure on blue chips.
German stocks were also pressured by reports showing German unemployment rising 39,000 to a 9.8 percent rate in June from 9.7 percent in May and industrial production falling 1.3 percent in May, which was worse than expected.
Earlier in Asia, prices on the Tokyo Stock Exchange ended higher as investors were encouraged by Wall Street's limited decline on Monday in the wake of the latest corporate accounting controversy. Japan's blue-chip Nikkei Stock Average of 225 selective issues, which eased 56.89 points Monday, rose 191.05 points, or 1.8 percent, to 10,960.25.
The market was supported by gains in technology stocks which investors bought after seeing only moderate falls among their U.S. counterparts on Monday.
Reports Monday of an accounting controversy at pharmaceutical giant Merck & Co. had some investors concerned of a steep decline on Wall Street. But the Dow Jones Industrial Average fell 1.1 percent to 9,274.90 and the Nasdaq Composite Index lost 3.0 percent, which left both indexes holding on to some of the strong gains they registered during Friday's shortened session.
Traders said concerns about upcoming reports on quarterly U.S. corporate earnings are making investors in Tokyo cautious about testing resistance on the Nikkei at 11,000.
The Japanese yen's strength in currency markets affected select exporters. But traders said investors were not rushing to sell a broad range of export issues as they try to gauge whether the Japanese currency will stay at current levels long enough to affect corporate earnings.
Elsewhere in Asia, prices ended slightly higher on the Hong Kong Stock Exchange in extremely thin trading as local investors remained cautious after Monday's declines on Wall Street. The blue-chip Hang Seng Index rose 39.70 points, or 0.37 percent, to 10,843.15.
Analysts said investors were also reluctant to take fresh positions as they awaited the market response on two upcoming initial public offerings by CK Life Sciences International Holdings and Bank of China (Hong Kong).
Prices ended slightly higher on the Taiwan Stock Exchange for the sixth consecutive session, lifted by strength in technology issues. The Weighted Index added 10.66 points, or 0.20 percent, to 5,388.52.
Prices also ended higher on the South Korean Stock Exchange. The Kospi Composite Index rose 18.64 points, or 2.38 percent, to 801.99 -- its highest close since hitting 809.40 back on June 18.
Analysts said the market was supported after the Asian Development Bank raised its 2002 forecast for South Korea's economic growth to 6.1 percent from 4.7 percent.
Elsewhere around the Pacific region, pries ended higher on the Australian Stock Exchange, lifted by strength in media and banking issues. The blue-chip All Ordinaries Index rose 24.30 points, or 0.76 percent, to 3,205.40.
