Investors still unsure of impact of Katrina, Rita

Associated Press

NEW YORK – Stocks fell Monday as Delphi Corp.’s bankruptcy filing and lowered outlooks at Northrop Grumman Corp. and Xilinx Inc. set a gloomy tone on Wall Street ahead of the upcoming third-quarter earnings season.

The market extended last week’s losses as investors grew anxious for earnings reports to gauge the impact of hurricanes Katrina and Rita, and to get a glimpse of where the economy is headed as companies forecast future results. Stocks took a hit after Northrop said the storms would hurt its 2005 profit, while chip maker Xilinx pegged its sales below previous targets.

However, “this is the time when you get profit warnings instead of earnings surprises,” said John Forelli, portfolio manager at Independence Investments LLC. “Once the reports start flying in next week, you typically get a lot of positive reinforcement from earnings.”

But the market received some good news after the close, when aluminum producer Alcoa Inc. posted a profit that beat analysts’ forecasts despite pressure from soaring energy costs and lower aluminum prices.