Reverse Spin – War: What is it good for? Not stocks

So much for that war rally.

Wall Street got knocked to its knees last Monday as images of captured U.S. soldiers and downed helicopters sent the stock market into a tailspin of its own. The Dow Jones Industrial Average ended the day at 8214.68, down 307.29 points, or 3.61%.

It was the biggest one-day decline since a 4.10% plunge in September. Meanwhile, the broader Standard & Poor’s 500 stock index fell 3.52% to 864.23, and the technology-laden Nasdaq Composite Index declined 3.66% to 1369.78.

For the week, the Dow industrials fell 4.41%, the S&P 500 was down 3.60%, and the Nasdaq lost 3.68%.

Taken ill

Heal thyself.

* The New York Stock Exchange on Tuesday said it would seek to delist HealthSouth Corp., a health-care rehabilitation chain based in Birmingham, Ala., amid federal allegations that its chairman, Richard Scrushy, engaged in massive accounting fraud.

The NYSE suspended trading on the stock March 19. HealthSouth shares now trade on the pink sheets.

The Securities and Exchange Commission recently filed civil charges accusing the company of overstating earnings by $1.4 billion since 1999 in a plot allegedly organized by Mr. Scrushy, who insists he is innocent.

On Thursday, HealthSouth said it has fired chief financial officer William Owens, who has pleaded guilty to fraud and agreed to cooperate with prosecutors. The company also said its lenders have determined it is in default under the terms of its credit facility, prompting it to say it can’t repay about $350 million of debt due tomorrow.

Buck stops here?

* A warning to supervisors to keep tight reins on their underlings:

Citigroup Inc.’s former head of U.S. stock research, Kevin McCaffrey, is under investigation by NASD for allegedly failing to supervise once-respected telecommunications industry analyst Jack Grubman, according to published reports Thursday.

Mr. McCaffrey, who now works at another unit within the New York-based financial services firm, denies the allegations, according to an NASD document.

Stock fund woes

* There are a lot of assets heading out the door.

Investors took $11.1 billion more out of U.S. stock mutual funds in February than they put in, the Investment Company Institute announced Thursday – a significant increase over the $371 million in net outflows it reported for the previous month.

On the bright side, investors added a net $19.6 billion to bond funds last month, compared with an inflow of $12.98 billion in January.

Money market funds, meanwhile, had net outflows of $39.6 billion in February, compared with outflows of $1.23 billion in January.

Rocky road

* Somehow, “Get a piece of the pebble” doesn’t sound as impressive as “Get a piece of the rock.”

Prudential Financial Inc., the nation’s No. 2 life insurer, said Friday that it is selling its specialty car insurance business at a $30 million pretax loss, in comparison with the unit’s book value.

The sale of THI Holdings Inc. of Cleveland to Nationwide Mutual Insurance Co. of Columbus, Ohio, for $138 million comes as Prudential of Newark, N.J., is considering its “options” for the rest of its car- and home-insurance business. Prudential is focusing on life insurance, pensions and money management.

Last month, the company agreed to merge its brokerage business with that of Charlotte, N.C.-based Wachovia Corp.