US stocks dropped on Friday after heavy equipment maker Caterpillar Inc cut its profit forecast and warned the housing downturn was spreading to other parts of the economy.
With investors mindful of the 20th anniversary of the stock market crash on Black Monday, major indexes fell more than 1 percent as Caterpillar said key industrial sectors it serves were in recession. The bleak comments from Caterpillar, which fell 3.6 percent, helped drag down the shares of other big manufacturers, including 3M Co - off 6.5 percent.
Crude oil prices falling from record highs drove energy companies' shares down, contributing to investors' shift from stocks to the relative safety of US government debt.
"There was some disappointing earnings news from industrials such as Caterpillar," said Jeffrey M. Mortimer, chief investment officer in equities at Charles Schwab Investment Management, in San Francisco. "The market is trying to figure out how strong the economy is, if we're in for a 'soft landing' or potentially heading towards a recession."
The Dow Jones industrial average was down 178.10 points, or 1.28 percent, at 13,710.86. The Standard & Poor's 500 Index was down 18.16 points, or 1.18 percent, at 1,521.92. The Nasdaq Composite Index was down 36.18 points, or 1.29 percent, at 2,763.13.
Comments
Comments are closed.