Closing Market Report

Star-Bulletin news services

Market stalls on fears
of a premature rally

NEW YORK >> Wall Street stalled yesterday as upbeat earnings from Northrop Grumman and Kellogg couldn't overcome 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."

Advancing issues finished even with decliners on the New York Stock Exchange. Consolidated volume was light at 1.64 billion shares, compared with 1.70 billion traded Friday. The Dow Jones industrial average closed down 18.06, or 0.2 percent, at 9,266.51.

The broader market finished mixed. The Nasdaq composite index rose 4.66, or 0.3 percent, to 1,735.36. The Standard & Poor's 500 index fell 2.16, or 0.2 percent, to 996.52. The Russell 2000 index rose 4.95, or 1.1 percent, to 473.83.

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.

The price of the Treasury's 10-year note closed down 29/32 point yesterday, while its yield rose to 4.29 percent from 4.18 percent Friday. Two-year Treasury notes were down 7/32 point and yielded 1.61 percent, up from 1.51 percent Friday.

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

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.

Kellogg rose 77 cents to $34.77 after the cereal maker reported a 19 percent increase in quarterly earnings that beat Wall Street's estimates.

Decliners included Dow components Altria Group, which fell 72 cents to $40.27, and Merck, which dropped 86 cents to $56.66.

Atlantic Coast Airlines slid $2.53, or 23.8 percent, to $8.09 after the regional air carrier said it would establish an independent low-fare airline and ended its relationship with United Airlines.

Japan's Nikkei stock average finished 2 percent higher yesterday. In Europe, France's CAC-40 advanced 1.8 percent, Britain's FTSE 100 gained 0.4 percent and Germany's DAX index climbed 1.8 percent.

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