US stocks close down
Wall Street ended a record-setting week quietly today, closing inches above 12,000 after a lacklustre profit report and forecast from Caterpillar dampened the market’s good mood and prompted many investors to pull back.
Caterpillar, one of the 30 blue chip stocks that comprise the Dow, unnerved investors who have bet that the slowing US economy would pull off a soft landing rather than tip into recession.
“Caterpillar must have taken about 60 to 70 points off the Dow,” said Stephen Carl, head of equity trading at The Williams Capital Group.
The Dow closed down 9.36, or 0.08%, at 12,002.37.
Broader stock indicators showed modest gains after spending much of the session in negative territory. The Standard & Poor’s 500 index was up 1.64, or 0.12%, at 1,368.60, and the Nasdaq composite index rose 1.36, or 0.06%, to 2,342.30 following a strong showing by Google.
The Dow rose 0.35% for the week, while the S&P gained 0.22% and the Nasdaq fell 0.64%. The Dow had shown triple-digit point gains in each of the previous three weeks. Despite the overall gains in the market, the S&P stands about 10.4% below its high close of 1,527.46 and the Nasdaq is even further off, about 54%. All three indexes had peaked in early 2000 before plunging in response to the dot-com bust, recession and the aftermath of the 2001 terror attacks.
Bonds showed little movement today, with the yield on the benchmark 10-year Treasury flat with 4.79% from late Thursday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude settled down $1.68 at $56.82 a barrel at the New York Mercantile Exchange. Oil fell to new lows for the year Friday amid scepticism about whether Opec would fully implement a greater-than-expected production cut.
Joe Battipaglia, chief investment officer at Ryan Beck & Co, contends that while earnings reports have been sound over all companies are coming in with more guarded forecasts. He also is concerned that falling oil prices could indicate the economy is slowing too quickly.
“Caterpillar today was sort of a splash of cold water on the notion that this economy is in the perfect place and will continue to be in the perfect place,” he said.
Caterpillar fell 10.02 or 14.5%, to 59 despite a 15% increase in its third-quarter profit. Though the company sold more construction and mining equipment, it warned increased operating costs and weaker-than-expected sales would cut into its full-year profits.
Google, the internet search company, jumped 33.61, or 7.9%, to 459.67 after its profit nearly doubled and revenue surged 70% during the third quarter, which is traditionally slower as people spend less time in front of a computer during the summer months.
Investors heard from other Dow components today to cap off a busy week of earnings reports.
3M rose 2.07, or 2.7%, to 78.47 after posting a 6.4% increase in its third-quarter profit amid renewed strength in its business of making films for LCD television and computer screens.
Drug maker Merck advanced 1.15, or 2.6%, to 45.64 after reporting stronger-than-expected earnings and revenue, though earnings were down 34% and sales were flat.
In other corporate news, SanDisk, which makes flash memory chips, fell 12.58, or 20.4%, to 49.15 after reporting a 4% decline in its third-quarter profit and forecasting prices would fall by as much as 20% in the fourth quarter.
Arch Coal was down 2.22, or 6.5%, to 32.04 after the company lowered its full-year profit forecast because of weakness in the domestic market. The company also said its third-quarter profit nearly tripled as operating costs fell.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume totalled 1.63 billion shares, compared with 1.64 billion on Thursday.
The Russell 2000 index of smaller companies was down 5.26, or 0.69%, to close at 762.13.
