- The Washington Times - Wednesday, July 23, 2003

NEW YORK (AP) — A batch of mixed earnings reports flustered Wall Street yesterday as investors searched in vain for strong evidence of a resurgent economy by year’s end. Stocks lurched up and down before ending the session modestly higher.

Strong profits from Eastman Kodak and Amazon.com gave a boost to the Dow Jones industrials and Nasdaq Composite Index, while Sun Microsystems weighed on the Standard & Poor’s 500 Index, analysts said.

“The earnings picture has been mixed — one day you have some pretty good earnings and guidance, the next day you get some not-so-great earnings and guidance,” said Jeff Swensen, senior trader at John Hancock Funds. “That’s creating a lot of volatility.”

The Dow closed up 35.79, or 0.4 percent, at 9,194.24.

The broader market also edged higher. The Nasdaq rose 13.08, or 0.8 percent, to 1,719.18. The S&P; 500 inched up 0.49, or 0.1 percent, to 988.60.

Investors have been watching the second-quarter earnings season for proof of a solid economic recovery after having sent stocks sharply higher since March. But while profits largely have been better than expected, company outlooks have been somewhat tepid, leading to choppy trading.

John Caldwell, chief equity strategist for McDonald Financial Group, part of Cleveland-based KeyCorp, said the market is likely to experience declines unless investors start seeing better-than-expected earnings forecasts for the rest of the year.

“We wouldn’t be surprised to see a pullback once we get beyond the earnings season, based on valuations,” he said. “We’re still not seeing a tremendous amount of unit growth and pricing power to drive top-line results. We’re still making it up in cost savings.”

Gainers included Amazon.com, which surged $5.24, or 15 percent, to $40.11, after the Internet retailer posted operating earnings that came in 4 cents higher than estimates. It also boosted its full-year sales projections.

Dow component Eastman Kodak advanced $2.27, or 9.2 percent, to $26.86 after the photography company posted sharply lower second-quarter income; excluding one-time items, however, its profits handily beat estimates. The company also is cutting about 4,500 to 6,000 jobs, citing a three-year slump in film sales.

But AOL Time Warner dropped $1.14, or 6.8 percent, to $15.71 although the media company reported earnings that beat Wall Street’s expectations. The profit came on one-time gains, including the sale of a 50 percent stake in Comedy Central and a settlement with Microsoft.

And Sun Microsystems slid 92 cents, or 19.3 percent, to $3.85 after the software maker posted fiscal fourth-quarter earnings and revenues that missed Wall Street’s estimates, citing continued weakness in technology spending.

Declining issues narrowly outnumbered advancers on the New York Stock Exchange. Volume came to 1.34 billion shares, compared with 1.44 billion traded Tuesday.

The Russell 2000 Index, which tracks smaller-company stocks, rose 2.14, or 0.5 percent, to 466.14.

Overseas, Japan’s Nikkei stock average finished 1.4 percent higher yesterday.

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