- The Washington Times - Monday, July 28, 2003

NEW YORK (AP) — Wall Street stalled yesterday as upbeat earnings from Northrop Grumman and Kellogg failed to offset investor concerns that the market’s recent rally might have come too quickly. Stocks closed narrowly mixed.

“Investors are trying to digest the earnings,” said John C. Forelli, portfolio manager for Independence Investment LLC. “We’re all trying to calibrate how self-sustaining this recovery will be.”

“The question is whether we have both the economic and earnings news to back up” the market’s advance, he added. “We need a couple of missing pieces of the puzzle, which are employment growth and increased business investment.”

The Dow Jones industrial average closed down 18.06, or 0.2 percent, at 9,266.51. It gained 1.1 percent last week, largely on an advance of 172.06 on Friday.

The broader market finished mixed. The Nasdaq Composite Index rose 4.66, or 0.3 percent, to 1,735.36, after a weekly advance of 1.3 percent. The Standard & Poor’s 500 Index fell 2.16, or 0.2 percent, to 996.52, after a 0.5 percent rise last week.

Stocks have lurched up and down in recent days as investors sift through quarterly earnings reports and look for evidence of a solid economic rebound. Some analysts believe that even if profits remain strong, the market may see pullbacks after surging so much since mid-March.

Investors also were trading cautiously in advance of economic reports expected later this week, including on consumer confidence today, gross domestic product on Thursday and employment on Friday. All should offer clues to the economy’s health.

“We’re kind of mired in the summer trading session,” said Stephen Carl, principal and head of equity trading at the Williams Capital Group. “People want to justify the earnings and strong corporate guidance going forward. Unless they see that, they might be inclined to take profits or stall a little bit.”

Northrop Grumman climbed $5.26 to $92.36 after the defense contractor posted a jump in second-quarter profits that handily beat expectations; it also raised its yearlong outlook.

AT&T;, a Dow component, gained $1.79 to $22.20 after Credit Suisse First Boston raised the telecommunications company’s stock rating to “outperform” from “neutral,” citing good valuation.

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