WHAT A MONTH: The Dow Jones industrial average and Standard & Poor’s had their best month since July 2009 and their first winning month since this past April. Strong earnings were behind the big gains.

BUT THE FUTURE’S UNCERTAIN: Trading at the end of July, including Friday’s narrowly mixed finish, showed that investors are cautious because of economic numbers that point to a slowing recovery.

THE NUMBERS: The Dow rose 7.1 percent for July, while the S&P 500 gained 6.9 percent.

NEW YORK – News that economic growth slowed during the spring gave the stock market a fitting end to a choppy July — yet another back-and-forth day.

The Dow Jones industrial average, down almost 120 points in the first minutes of trading, recovered and seesawed throughout the session. The Dow was up 17 in late afternoon. The other major indexes also rose modestly. Traders opted for the safety of Treasury bonds, and that sent interest rates lower.

But stocks were on track for their strongest month in a year. The Dow was up 7.1 percent going into Friday’s trading.

The Commerce Department said the gross domestic product, the broadest measure of the economy, grew at an annual pace of 2.4 percent from April to June. That’s less than the 2.5 percent economists polled by Thomson Reuters had forecast.

At first the report confirmed investors’ belief that the recovery is weakening as unemployment remains high and government stimulus programs end. Consumers cut back on their spending because of job worries and companies spent less to rebuild inventories.

But analysts said that as investors read deeper into the report, it didn’t look as bad as they initially thought. They found some good news in consumers’ savings rate.

“The consumer actually decided to save more,” Jason Pride, director of investment strategy at Glenmeade, an investment management company. “Consumers have done more to repair their balance sheets than thought.”

Pride said that means that those extra savings will eventually be spent, giving the economy a lift. Consumer spending accounts for the bulk of economic activity.

Business spending on equipment and software jumped in the second quarter by the biggest amount in 13 years. That was encouraging, analysts said, because it means companies are eventually going to start adding jobs.

“Companies are spending and eventually it will turn into employment,” said Ron Weiner, president and CEO at RDM Financial Group.

It wasn’t surprising that stocks gave up their gains and turned lower. Trading has been erratic as weak economic numbers have conflicted with companies’ generally good second-quarter earnings and forecasts for the rest of the year. Investors have been quick to cash in their gains because they don’t have a sense of where the market is headed.

In afternoon trading, the Dow Jones industrial average rose 17.48, or 0.2 percent, to 10,484.64. The Standard & Poor’s 500 index rose 3.34, or 0.3 percent, to 1,104.87, while the Nasdaq composite index rose 9.09, or 0.4 percent, to 2,260.78.

Rising stocks outpaced losers by about 2 to 1 on the New York Stock Exchange where volume came to 745 million shares.

Volume was extremely light even for a summer day. That continued a trend that has been seen for much of July. Analysts say many investors, uncertain about the where the market is heading, are staying on the sidelines or moving money into safer alternatives.

That strategy sent Treasurys higher Friday. The yield on the 10-year Treasury note, which moves opposite its prices, fell to 2.91 percent from 2.99 percent. Its yield is often used as a benchmark for interest rates on mortgages and other consumer loans. A yield below 3 percent suggests investors are worried about long-term growth and don’t fear inflation will be a problem anytime soon. Inflation is a threat to the long-term value of bonds.

Investors got some mildly good news from two other economic reports. The University of Michigan/Reuters consumer sentiment index for July rose slightly more than expected to 67.8 from a preliminary reading of 66.5. Economists expected it to rise to 67.

And the Chicago Purchasing Managers Index, which measures manufacturing activity in the Midwest, rose unexpectedly to 62.3 this month from 59.1 in June. Economists were expecting a drop to 56.5. The report is seen as an indicator of how the Institute for Supply Management’s nationwide index is likely to come in when it’s released on Monday.

Traders were also being cautious because they’re waiting for a series of key reports next week that will give a first look at how the economy is doing in the current quarter. The Institute for Supply Management releases its reports on the manufacturing and services sectors during July and the Labor Department issues its report on employment for this month.

Economists predict the two ISM reports will show manufacturing and the services industry expanded in July but at a slower pace than in June.

Meanwhile, the unemployment rate likely inched higher to 9.6 percent in July from 9.5 percent in June as the government laid off more temporary census workers. Private employers likely added 90,000 jobs during the month, slightly better than in June.

Overseas markets mostly fell Friday after reports that Spain’s credit rating is likely to be cut by Moody’s Investors Service. The potential downgrade comes as the country’s unemployment rate jumped to a 13-year high of 20.09 percent and the government continues to grapple with rising debt problems.

Spain’s IBEX 35 fell 1.2 percent. Britain’s FTSE 100 fell 1.1 percent, Germany’s DAX index rose 0.2 percent, and France’s CAC-40 fell 0.2 percent. Japan’s Nikkei stock average fell 1.6 percent.

LONDON (AFP) – Leading shares in London slipped lower on Friday after weaker-than-expected US growth figures stirred concern about the strength of the economic recovery, dealers said.

The figures showed the US economy grew 2.4 percent in the second quarter, short of forecasts for 2.5 percent and down from a revised 3.7 percent in the first.

The benchmark FTSE 100 index closed 1.05 percent lower at 5,258.02 points.

Lloyds Banking Group (LBG) was the most traded stock, seeing 152 million shares switch owners, followed by Vodafone, which saw 80 million units change hands.

British utility company United Utilities was the top blue-chip performer, adding 4.37 percent — or 24.5 pence — to end at 585, followed by water company Severn Trent, which rose 2.34 percent — or 30 pence — to end at 1,310.

Indian power generation company Essar Energy was the biggest faller, shedding 3.45 percent — or 14.8 pence — to end at 414.1, followed by insurer Legal and General, which closed down 2.77 percent — or 2.55 pence — at 89.55.

Meanwhile, the pound rose against both the dollar and the euro.

At 17:20 BST, the pound was trading at 1.572 dollars, up from 1.560 dollars at the same time on Thursday, while sterling stood at 1.203 euros, up from 1.192 over the same period.

NEW YORK – Stock prices fluctuated Friday after investors found some upbeat news in the government’s assessment of the economy during the April-June quarter.

The Dow Jones industrial average, down almost 120 points in the first minutes of trading, recovered and was down 8 points at midday. The other major indexes also wiped out their losses and were slightly higher.

Still, some traders were cautious and opted for the safety of Treasury bonds instead of riskier stocks. That helped push interest rates lower.

The Commerce Department said the gross domestic product, the broadest measure of the economy, grew at an annual pace of 2.4 percent from April to June. That’s less than the 2.5 percent economists polled by Thomson Reuters had forecast.

At first the report confirmed investors’ belief that the recovery is weakening as unemployment remains high and government stimulus programs end. Consumers cut back on their spending because of job worries and companies spent less to rebuild inventories.

But analysts said that as investors read deeper into the report, it didn’t look as bad as they initially thought. They found some good news in consumers’ savings rate.

“The consumer actually decided to save more,” Jason Pride, director of investment strategy at Glenmeade, an investment management company. “Consumers have done more to repair their balance sheets than thought.”

Pride said that means that those extra savings will eventually be spent, giving the economy a lift. Consumer spending accounts for the bulk of economic activity.

Business spending on equipment and software jumped in the second quarter by the biggest amount in 13 years. That was encouraging, analysts said, because it means companies are eventually going to start adding jobs.

“Companies are spending and eventually it will turn into employment,” said Ron Weiner, president and CEO at RDM Financial Group. “Eventually they need to hire people to run the computers” they are buying, Weiner said.

Investors also got some mildly good news from two other reports. The University of Michigan/Reuters consumer sentiment index for July rose slightly more than expected to 67.8 from a preliminary reading of 66.5. Economists expected it to rise to 67.

And the Chicago Purchasing Managers Index, which measures manufacturing activity in the Midwest, rose unexpectedly to 62.3 this month from 59.1 in June. Economists were expecting a drop to 56.5. The report is seen as an indicator of how the Institute for Supply Management’s nationwide index is likely to come in when it’s released on Monday.

In midday trading, the Dow Jones industrial average fell 8.03, or 0.1 percent, to 10,459.13. The Standard & Poor’s 500 index fell 1.29, or 0.1 percent, to 1,100.24, while the Nasdaq composite index rose 0.27, or less than 0.1 percent, to 2,251.96.

The Dow entered the last day of July up 7.1 percent for the month. The market’s big gains have come on strong corporate earnings and profit forecasts that conflict with economic reports that point to a slowdown.

Rising stocks narrowly outpaced those that fell on the New York Stock Exchange where volume came to 360.8 million shares.

Even as some investors moved back into stocks, many stayed in safer Treasurys. The yield on the 10-year Treasury note, which moves opposite its prices, fell to 2.92 percent from 2.99 percent. Its yield is often used as a benchmark for interest rates on mortgages and other consumer loans.

Traders were also being cautious Friday because they’re waiting for a series of key reports next week that will give a first look at how the economy is doing in the current quarter. The Institute for Supply Management releases its reports on the manufacturing and services sectors during July and the Labor Department issues its report on employment for this month.

Economists predict the two ISM reports will show manufacturing and the services industry expanded in July but at a slower pace than in June.

Meanwhile, the unemployment rate likely inched higher to 9.6 percent in July from 9.5 percent in June as the government laid off more temporary census workers. Private employers likely added 90,000 jobs during the month, slightly better than in June.

Overseas markets mostly fell Friday after reports that Spain’s credit rating is likely to be cut by Moody’s Investors Service. The potential downgrade comes as the country’s unemployment rate jumped to a 13-year high of 20.09 percent and the government continues to grapple with rising debt problems.

Spain’s IBEX 35 fell 1.2 percent. Britain’s FTSE 100 fell 1.1 percent, Germany’s DAX index rose 0.2 percent, and France’s CAC-40 fell 0.2 percent. Japan’s Nikkei stock average fell 1.6 percent.

NEW YORK (Reuters) – Stocks opened lower on Friday after data showed U.S. economic growth slowed more than expected in the second quarter, underscoring worries about the recovery.

The Dow Jones industrial average (.DJI) was down 81.74 points, or 0.78 percent, at 10,385.42. The Standard & Poor’s 500 Index (.SPX) was down 9.92 points, or 0.90 percent, at 1,091.61. The Nasdaq Composite Index (.IXIC) was down 23.76 points, or 1.06 percent, at 2,227.93.

(Reporting by Caroline Valetkevitch; Editing by Theodore d’Afflisio)

NEW YORK – Stock futures dropped Friday as investors cautiously awaited the government’s first reading on gross domestic product.

GDP, the measure of the economy’s total quarterly output, is likely to confirm that the recovery slowed in the second quarter. The exact pace of that slowdown is what has had traders on edge in recent days. Economic data over the past few months has shown nearly all sectors of the economy have weakened as unemployment remains high and government stimulus programs end.

Economists polled by Thomson Reuters forecast the economy grew at an annual rate of 2.5 percent in the April-June quarter, slower than the 2.7 percent expansion in the first quarter.

A disappointing report would stoke fears that the economy will fall back into recession and likely erase some of the big gains seen in the stock market throughout the month.

The Dow Jones industrial average is entering the last day of July up 7.1 percent for the month. The big gains have come on the back of strong corporate earnings and profit outlooks that contradict the economic data that points to a slowdown. The big gains during the month pushed the Dow back into positive territory for the year.

Earnings and outlooks have been pushed to the background in recent days leading up to the GDP report. Economic reports and cautious words from the Federal Reserve and its chairman Ben Bernanke have also put a halt to the gains over the past few days.

Earnings could not provide any lift Friday. Merck & Co. reported better-than-expected adjusted earnings, but its revenue came up short of forecasts.

Ahead of the opening bell, Dow Jones industrial average futures fell 36, or 0.4 percent, to 10,373. Standard & Poor’s 500 index futures fell 4.90, or 0.5 percent, to 1,092.10, while Nasdaq 100 index futures fell 5.75, or 0.3 percent, to 1,851.50.

Uncertainty about the GDP report has sent investors into the safety of the bond market, which drove interest rates lower. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.95 percent from 2.99 percent late Thursday. Its yield is often used as a benchmark for mortgages and other consumer loans.

Merck shares dipped 26 cents to $34.80 in pre-opening trading.

European markets fell after reports that Spain’s top-notch credit rating is likely to be cut by Moody’s Investors Service. The potential downgrade comes as the country’s unemployment rate jumped to a 13-year high of 20.09 percent and the government continues to grapple with rising debt problems.

Spain’s IBEX 35 fell 1.1 percent. Britain’s FTSE 100 fell 0.7 percent, Germany’s DAX index dropped 0.6 percent, and France’s CAC-40 fell 0.6 percent. Japan’s Nikkei stock average fell 1.6 percent.

LONDON – World markets fell Friday despite another batch of positive earnings statements in Asia and Europe as investors fretted about a key U.S. economic growth report due later.

In Europe, the FTSE 100 index of leading British shares was down 22.80 points, or 0.4 percent, at 5,291.15 while Germany’s DAX fell 32.95 points, or 0.5 percent, to 6,101.75. The CAC-40 in France fell 21.82 points, or 0.6 percent, to 3,630.09.

Wall Street was also expected to drop at the open following a late reversal Thursday — Dow futures were down 28 points, or 0.3 percent, at 10,381 while the broader Standard & Poor’s 500 futures fell 5.6 points, or 0.5 percent, to 1,091.40.

All that could change, though, depending on how the U.S. growth data comes out.

At the moment, the consensus in the markets is that the world’s biggest economy expanded about 2.5 percent in the April-to-June quarter. That’s down from 2.7 percent in the first quarter and not nearly enough to get the jobs market going again.

Investors are particularly fretful about the release because it comes at the end of a run of worse than expected economic data and a warning from the U.S. Federal Reserve that the U.S. economy is losing its momentum.

“The risk for financial markets is of a below-expectation number in the light of recent weakness in U.S. economic data,” said Neil MacKinnon, global macro strategist at VTB Capital.

The dollar has borne the brunt of market concerns about the pace of the U.S. economic recovery. On Thursday, the euro managed to hit a new 11-week high of $1.3106.

By mid morning, however, the dollar had recovered some of its poise as investors nervously awaited the GDP data, and the euro was down 0.5 percent at $1.3007.

Analysts say that if U.S. growth comes in below expectations, both stocks and the dollar will suffer a sell-off. However, if the figures surprise on the upside, relief could send both higher.

With the focus so heavily on the U.S. data, there’s been little market impact to another array of positive earnings, from the likes of Japanese electronics companies Samsung and Sony, British Airways and French electronics firm Alcatel-Lucent.

Earlier in Asia, Japan’s Nikkei 225 stock average dropped 158.72 points, or 1.6 percent, to 9,537.30 for a second straight day of decline. The Nikkei was hit again by the continuing export-sapping appreciation of the yen. A strong yen also reduces the value of profits brought back from overseas — a major concern for Japanese exporters this year.

By mid morning London time, the dollar was 0.8 percent lower at 86.20 yen.

Elsewhere, South Korea’s Kospi declined 0.7 percent to 1,759.33 and the S&P/ASX 200 in Australia fell 0.7 percent to 4,493.50. China’s Shanghai Composite Index gave up 0.4 percent to 2,637.50 and benchmarks in Taiwan, Singapore and Indonesia also retreated. Markets in Malaysia, New Zealand and Vietnam rose.

Benchmark crude for September delivery was down 65 cents at $77.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.37 to settle at $78.36 on Thursday.

NEW YORK (Reuters) – Citigroup Inc (C.N) will pay $75 million to settle charges that it failed to disclose subprime exposure to investors in 2007, the U.S. Securities and Exchange Commission said on Thursday.

The SEC also charged a Citigroup executive and a former chief financial officer of misrepresenting the bank’s exposure, although not with intentional misconduct. It was one of a very few cases in which financial executives have faced any kind of charges, civil or criminal, related to the 2008 credit meltdown.

Earlier this month, Goldman Sachs Group Inc (GS.N) agreed to pay $550 million to settle civil fraud charges over how it marketed a subprime mortgage product. At the time, the SEC’s enforcement director said the agency was continuing to probe subprime deals across a wide variety of institutions.

It is unclear if he was referring specifically to the Citigroup probe, but the SEC in general has been looking at banks’ subprime misdeeds for years.

The comparatively small settlement against Citigroup came a full three years after the bank began understating its subprime exposure. To many analysts, it will prolong the financial sector’s pain.

“This is the type of stuff that erodes investor confidence,” said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel Inc.

It is also the type of stuff that feeds other lawsuits. Steven Singer, a plaintiffs’ attorney representing bondholders who are suing Citigroup on related charges, said the SEC’s settlement would be “very helpful” to his case.

Some analysts railed against the SEC’s actions.

“If the goal of the SEC is every two or three weeks to come out and say that there’s another financial company that’s done something wrong,” the agency will drive home the belief “that the financial system in the United States is rotten, that it’s run by crooks who create fraudulent products,” said Dick Bove, analyst at Rochdale Securities.

As investors wait for more regulatory shoes to drop, “the markets will continue to act in the volatile fashion that they are right now,” he said.

INDIVIDUAL RESPONSIBILITY

Citigroup understated its exposure by about $40 billion, the SEC said. The agency charged Citigroup with material omission of disclosure requirements.

Failing to disclose exposure is serious business to investors, who decide how much to pay for bank stocks in part by trying to figure out the real value of the company’s assets minus its liabilities.

Under the settlement, the bank did not admit or deny the allegations. The SEC has asked a federal judge to approve the agreement.

Citigroup spokesman Jon Diat said the bank was pleased that it had reached a deal with the SEC.

Former Chief Financial Officer Gary Crittenden, who left the bank in 2009, agreed to pay $100,000 under the settlement.

“This is the highest-ranking corporate officer to be yet named in the still-continuing investigation of the 2008-2009 crisis,” said John Coffee, law professor at Columbia.

Arthur Tildesley Jr, Citigroup’s former head of investor relations and current head of cross-marketing, agreed to pay $80,000.

Crittenden and Tildesley “were repeatedly provided with information about the full extent of Citigroup’s subprime exposure” during 2007, but both “helped draft and then approved” disclosures to investors that under-reported that exposure, the SEC said on Thursday.

Crittenden’s lawyer, John Carroll of Skadden Arps, said via email that the former CFO “did not admit or deny any liability” and “is pleased to have resolved this matter.”

Tildesley’s lawyer, Mark Stein at Simpson Thacher & Bartlett LLP, declined to comment and referred queries to Citigroup.

Diat called Crittenden “a highly valued senior officer” who “played a critical role in helping Citi navigate” the financial crisis. He said Tildesley is “a highly valued employee” who “is making significant contributions to the company.”

MISSING $40 BILLION

In the second and third quarters of 2007, Citigroup told investors that its subprime exposure was $13 billion or less, when in fact it was more than $50 billion, the SEC said. The $13 billion figure omitted two categories of subprime-backed assets totaling roughly $40 billion of exposure.

Citigroup did not disclose its true subprime exposure until November 2007. By the end of that year, it had posted a huge writedown on subprime assets. Its chief executive, Charles Prince, resigned, in large part because of the writedowns.

Citigroup’s bad bets on subprime and other assets eventually forced the government to provide $45 billion of capital to the bank across three rescues in 2008 and 2009. The government still owns an almost 18 percent stake in the bank.

Citigroup shares closed up 3 cents at $4.12 on the New York Stock Exchange on Thursday..

(Reporting by Maria Aspan; additional reporting by Dan Wilchins in New York and Emma Ashburn in Washington; Editing by Leslie Gevirtz, Maureen Bavdek, Matthew Lewis and Bernard Orr)

DALLAS – Sam and Charles Wyly, Dallas billionaire investors known for their support of conservative candidates and causes, made $550 million in undisclosed profits through 13 years of insider trading, according to a Securities and Exchange Commission lawsuit filed Thursday.

In a 78-page complaint filed in a Manhattan federal court in New York, the SEC said the Wylys held and traded tens of millions of shares in companies on whose boards they served and “defrauded the investing public” by misrepresenting their ownership and trading of those stocks.

“The apparatus of the fraud was an elaborate sham system of trusts and subsidiary companies located in the Isle of Man and the Cayman Islands … created by and at the direction of the Wylys,” the SEC complaint stated.

Using this offshore system, the Wylys were able to sell stock worth more than $750 million in four public companies where they served as corporate directors. They also committed an insider trading violation at one of the companies that resulted in an unlawful gain of over $31.7 million, according to the complaint.

The complaint lists the four companies as Michaels Stores Inc., Sterling Software Inc., Sterling Commerce Inc. and Scottish Annuity & Life Holdings Ltd., which is now known as Scottish Re Group Ltd.

“The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws,” Lorin L. Reisner, SEC deputy director of enforcement, said in a statement Thursday. “They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders.”

The Wylys’ defense attorney, William A. Brewer III of Dallas, called the charges “without merit” and said the Wylys “intend to vigorously defend themselves – and expect to be fully vindicated.”

“At worst, the claims appear to represent an after-the-fact justification for a misguided six-year investigation,” Brewer said in a statement issued by his law firm.

In March, Forbes magazine estimated Sam Wyly’s net worth at $1 billion. He has given generously to Republican causes and candidates, including the Swift Boat campaign that helped re-elect President George W. Bush in 2004 by tarring his Democratic opponent, Sen. John Kerry.

The Wyly brothers, with their wives, have donated almost $2.5 million to more than 200 Republican candidates and committees at the federal level over the past two decades, according to the nonpartisan Center for Responsive Politics.

Both Presidents Bush received donations from the Wylys. Other recipients included current and former Republican senators: Kay Bailey Hutchison, John Cornyn and Phil Gramm of Texas; Sam Brownback and Bob Dole of Kansas; Elizabeth Dole of North Carolina; Mel Martinez of Florida; Judd Gregg of New Hampshire; John Thune of South Dakota; and Kit Bond of Missouri.

Also named as defendants in the lawsuit are the Wylys’ investment attorney, Michael C. French of Dallas, who was accused of covering the operation “with a false cloak of legality that was essential both to its concealment and its execution. Another defendant was the Wylys’ stockbroker, Louis J. Schaufele III of Dallas, who was accused of using his position to conceal and misrepresent the Wylys’ control over the securities and making insider trades himself.

Attorneys for French and Schaufele had no comment Thursday.

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Associated Press Business Writer Marcy Gordon in Washington contributed to this report.