US stocks mostly lower; Caterpillar drags down Dow
Trader David O’Day, left, works with specialist Mark Fitzgerald on the floor of the New York Stock Exchange Monday, July 22, 2013. US stocks Wednesday closed mostly lower, with weak earnings and a gloomy outlook from Caterpillar weighing down the Dow. AP PHOTO/RICHARD DREW
NEW YORK CITY—US stocks Wednesday closed mostly lower, with weak earnings and a gloomy outlook from Caterpillar weighing down the Dow.
The Dow Jones Industrial Average lost 25.50 (0.16 percent) at 15,542.24, pulling back from a record close on Tuesday.
The broad-based S&P 500 slipped 6.45 (0.38 percent) to 1,685.94, while the tech-rich Nasdaq Composite Index was flat, inching up a bare 0.33 (0.01 percent) to 3,579.60.
Michael James, managing director of equity trading at Wedbush Morgan Securities, said the performance reflected the market is “overextended” after a series of recent record highs.
“Given the big moves the market already had, people want to take some exposure out of the sheet today,” James said.
Alan Skrainka, chief investment officer at Cornerstone Wealth Management, cited one report that said that while most companies have beaten analyst profit estimates, only 56 percent have bested revenue expectations.
“Revenue right now is telling a story of an economy that is moving along at a pretty sluggish pace,” Skrainka said.
Dow component Caterpillar fell 2.4 percent after reporting a 43.5 percent drop in earnings and slashing its full-year forecasts due to weak demand in its operating segments, especially mining.
Chip and software provider Broadcom plummeted 15.1 percent after Citigroup downgraded the stock to “neutral” on concerns it could suffer from a slowing and saturated high-end smartphone market.
Home builders took a tumble after a jump in US bond yields revived concerns about the potential drag of higher interest rates on the housing recovery. Lennar Corp. dropped 3.8 percent, PulteGroup sank 4.6 percent and Ryland Group fell 3.5 percent.
Apple surged 5.1 percent after profits came in at $7.47 per share, 16 cents above expectations. The results were buoyed by strong sales of iPhones even if net profits declined 22 percent from the year-ago level.
Automaker Ford rose 2.5 percent after profits jumped 18.6 percent to $1.2 billion following strong sales in the US and China.
Ford rival General Motors, which reports earnings Thursday, rose 1.5 percent.
In non-earnings new, Dell closed 0.3 percent higher in choppy trading after a consortium led by company founder Michael Dell increased its bid to take the company private from $13.65 a share to $13.75 a share. The new bid is the group’s “best and final proposal,” the consortium said.
Bond prices fell. The yield on the 10-year US Treasury bond rose to 2.59 percent from 2.52 percent Tuesday, while the 30-year increased to 3.65 percent from 3.59 percent. Bond prices and yields move inversely.
