STOCK MARKET

Caterpillar, AT&T drag down the Dow

Tech stocks rise after Apple beats earnings estimates

7/24/2013

NEW YORK — A gloomy outlook from Caterpillar, the world’s largest construction equipment company, tugged the stock market lower in midday trading today.

Caterpillar said its earnings fell 43 percent in the second quarter as China’s economy slowed and commodity prices sank. The company also warned of slowing revenue and profit, and its stock dropped $1.37, or 1.6 percent, to $84.16.

Apple led a rise in technology stocks after it beat analysts’ estimates for quarterly earnings and revenue. The company reported late Tuesday that it shipped more iPhones in the latest quarter and also announced plans to introduce new products in the fall. Apple jumped $20.60, or 5 percent, to $439.65.

Outside of technology stocks, the broader market edged down. Utilities led eight of the 10 industry groups in the S&P 500 lower.

Shortly after noon, the Dow Jones industrial average was down 31 points, or 0.2 percent, to 15,535.

The Standard & Poor’s 500 index was down four points, or 0.2 percent, at 1,688. The technology-heavy Nasdaq composite index climbed 16 points, or 0.5 percent, to 3,596.

Despite some high-profile earnings misses, the overall picture for corporate profits has looked good for the second quarter. More than six out of every 10 companies have turned in earnings that beat Wall Street’s estimates, according to S&P Capital IQ.

“Yes, they’re beating expectations, but expectations are so low,” said Brad McMillan, chief investment officer at Commonwealth Financial. Outside of banks, earnings don’t look so good, he said. “You can’t call this a blowout quarter so far.”

Analysts forecast that second-quarter earnings for companies in the S&P 500 increased 3.9 percent over the same period last year. But they expect revenue to shrink 0.7 percent.

Among other stocks making big moves, AT&T fell 82 cents, or 2.3 percent, to $34.98. AT&T’s profits fell in the latest quarter as costs surged. The company’s coffers were drained by smartphone sales, which it subsidizes in the hope of making money back over the life of two-year contracts.

In Europe, a broad gauge of economic activity reached the highest level since January 2012, sending stock markets in Germany and France higher. Financial information company Markit said today that its monthly purchasing managers’ index for the countries that use the euro currency increased for the fourth month running.

France’s CAC 40 rose 1 percent and Germany’s DAX rose 0.8 percent.

The report out of Europe pushed prices for U.S. government bonds down and their yields up. The yield on the 10-year Treasury note rose to 2.58 percent from 2.51 percent late Tuesday.

Signs of economic strength usually lead traders to sell Treasurys, considered one of the safest places in the world to park cash.