Across the Nation

Police investigate Islamics in ship attack

ADEN, Yemen -- Crew members of the USS Cole worked to restore their damaged warship and searched for the bodies of those still missing yesterday, even as Americans back home paid tribute at a memorial service to 17 sailors who died in the explosion.

U.S. and Yemeni authorities are investigating the apparent suicide bombing. A 12-year-old Yemeni boy provided a lead in the investigation, Yemeni President Ali Abdullah Saleh said Wednesday in a television interview.

At the tearful service in Norfolk, Va., President Clinton mourned the dead and sternly warned those who organized the Oct. 12 attack.

"You will not find a safe harbor, for we will find you and justice will prevail," he said.

Aboard the Cole, sailors who held a small memorial on Sunday continued bailing water from the crippled vessel and searching for the bodies of four crew members still missing.

"They are trying to finish their job, trying to find the remains," said Lt. Terrence Dudley, a spokesman for the U.S. 5th Fleet.

Eight bodies pulled from the wreckage on Tuesday were flown to the United States, Navy officials said. Five recovered earlier have already been returned for burial. Most of the 39 sailors injured in the blast have returned to the United States, though two were being treated at a U.S. military hospital in Germany.

The investigation is focused on an Aden neighborhood surrounding an apartment where police found bomb-making equipment on Monday.

Neighbors said police had questioned the landlord and a real estate agent who found the apartment for two men who have been missing since the attack. Yemeni officials, who spoke on condition of anonymity, identified the possible suspects only as non-Yemeni Arabs.

A Yemeni boy told authorities that a bearded man wearing glasses gave him small change and told him to watch his car near the port on the day of the bombing, Saleh said Wednesday, on the popular Arab satellite news station Al-Jazeera.

According to the child, the man then took to the sea in a rubber boat he had carried atop the car, and did not return, Saleh said. Yemeni police were apparently able to trace the man back to the apartment.

Officials believe a small rubber boat packed with explosives was maneuvered next to the Cole by two suicide bombers and then detonated.

Market tumbles; causes inflation fear

NEW YORK -- Stocks dropped sharply in volatile trading yesterday, slicing more than 400 points off the Dow Jones industrials before bargain hunters moved in and helped the market recover most of its losses.

Investor despair over a generally bleak earnings outlook brought the Dow to its first close below 10,000 since March 14, although the blue chips managed to regain more than 300 points during the course of the day. The tech-focused Nasdaq composite index ended with a moderate loss, but it also rebounded smartly from its lows of the session.

A disappointing earnings report from IBM was the catalyst for Wall Street's latest sharp decline.

"I think we are near the bottom, but this is a bottom that's going to need some credibility," said Brian Belski, a market strategist at U.S. Bancorp Piper Jaffray, who said bargain hunting, not any resolution of market problems, was responsible for the upturn. "There are still doubts about earnings growth rates and there are going to be doubts about the rally and reversal today."

Bill Barker, an investment strategy consultant with Dain Rauscher, warned that the worst may not be over, saying, "we're working our way through earnings, but the fundamentals haven't changed."

"Oil is still high, the euro is down and the Middle East is still in a potentially explosive situation," he said.

The Dow closed down 114.69 at 9,975.02, largely because of a huge drop in IBM. An early decline of more than 433 points sent the Dow to its lowest intraday trading level since March 24, 1999.

The Nasdaq fell 42.40 to 3,171.56, bobbing in and out of positive territory after rebounding from a nearly 188-point slide in the first hour. And the Standard & Poor's 500 index was down 7.84 at 1,342.13, having recovered from an early drop of 44 points.

Several big high-tech companies releasing earnings after the market closed had a more muted response from traders than IBM had on Tuesday, when it plunged in after-hours dealings.

Microsoft, which beat Wall Street estimates by 5 cents a share, was up $2.13 at $53.88 in late trading, extending its $1.31 regular session gain.

Counsel: Clinton gave false testimony

WASHINGTON - Independent Counsel Robert Ray concluded Hillary Rodham Clinton gave "factually false" testimony when she denied having a role in the White House travel office firings. His final report yesterday gave ammunition to her Senate rival three weeks before Election Day.

Ray said he decided not to prosecute Mrs. Clinton because he could not prove she intended to deceive or even knew that her contacts with White House aides had instigated the May 1993 firings.

But he wrote that the evidence established beyond a reasonable doubt that Mrs. Clinton helped prompt the firings of seven travel office workers.

The dismissals spurred one of the earliest controversies of her husband's presidency.

"Mrs. Clinton ... played a role in the decision to fire the employees and ... thus, her statement to the contrary under oath to this office is factually false," Ray concluded in a report that divulged testimony she gave to prosecutors.

Ray wrote that she made "factually inaccurate" statements to criminal investigators and Congress about the matter.

Locked in a tight race for a Senate seat from New York, Mrs. Clinton dismissed the findings during a campaign stop in Syracuse, N.Y.

"Most New Yorkers and Americans have made up their minds about this," she said.

Asked if she was concerned about the report's release so close to the election, she added: "That's something I have no control over."

Her attorney, David Kendall, immediately assailed the prosecutor's conclusions as "highly unfair and misleading.