Stock Drop On Mixed Earnings; Caterpillar Sinks
By STEVE ROTHWELL
NEW YORK (AP) â¿¿ A four-day streak of record closes ended for the Standard & Poor's 500 index Wednesday after Caterpillar reported weak earnings and falling oil prices hurt energy stocks.
Caterpillar, which makes mining and construction equipment, is considered an important barometer of the global economy. The plunge in Caterpillar's third-quarter profit discouraged investors and stalled a two-week surge in the stock market. Energy stocks dropped as the price of oil fell to its lowest in almost four months.
The S&P 500 fell 8.29 points, or 0.5 percent, to 1,746.38, ending its longest streak of record closes since mid-May.The S&P 500 had surged 6 percent over the previous two weeks, capped by a record close of 1,754.67 on Tuesday. The index climbed as lawmakers inched toward a deal to end a 16-day partial government shutdown and avert a potential U.S. default. Investors also became more convinced that the Federal Reserve would refrain from pulling back on its economic stimulus until possibly next year. "We need to let a little bit of air out of the balloon here," said Alec Young, a global equity strategist at S&P Capital IQ. "We've seen a huge rally, so there's a bit of short-term exhaustion." Energy stocks fell the most of the 10 industry groups in the S&P 500. The price of oil slipped $1.44, or 1.5 percent, to $96.86 a barrel, on higher supplies of U.S. oil and weak demand for fuel. Along with weaker earnings, Caterpillar issued a lower profit forecast. Its stock dropped $5.41, or 6.1 percent, to close at $83.76. Broadcom was another company that disappointed Wall Street. Shares of the communications chip maker fell 78 cents or 2.9 percent, to $26.36. The company on Tuesday gave a disappointing revenue outlook for the fourth quarter. Also weighing on the stock was Apple's decision not to include a new wireless computer networking standard in its latest iPad model.
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