US stocks snap rally on subdued earnings forecasts
Stocks on the American exchange snapped a five day rally after earnings forecasts were revised for large US-based enterprises.
Caterpillar (NYSE:CAT) fell more than 6 percent after the heavy equipment maker posted lower than forecasted quarterly profits, prompting another revision of the company’s full-year forecast. The company cited a prolonged demand drag from the mining sector as the biggest reason for its less than stellar performance. The company also said it expects revenue growth to be relatively flat in 2014 when compared to this year. Caterpillar reported quarterly profit of $946 million, well below the $1.7 billion profit it enjoyed a year ago.
In economic news, house prices advanced 0.3 percent in August, down from 0.8 percent the previous month, according to the Federal Housing Finance Agency. Mortgage approvals fell 0.6 percent as of October 18, according to the Mortgage Bankers Association, likely due to the backlog created by the partial government shutdown.
The Standard & Poor’s 500 fell 0.47 percent to 1,746.38 after appreciating more than 3 percent over the previous five days. The benchmark gauge extended its record high after the US economy managed to create only 148,000 jobs last month. The Dow Jones Industrial Average fell 54 points to 15,413.30 after all but eight of its 30 members reported losses. The losses incurred by Caterpillar were more than enough to offset strong gains from The Boeing Company, which advanced more than 5.3 percent.
The NASDAQ Composite registered the steepest proportional decline, falling 0.57 percent to 3,907.07 after a mixed day from the technology sector. Apple rallied, but Microsoft (NASDAQ:MSFT) , Intel (NASDAQ:INTC) and Facebook (NASDAQ:FB) fell at least 1.4 percent.
Despite Caterpillar’s earnings miss, analysts are optimistic most S&P 500 companies will report strong earnings this season. More than three-quarters of the 162 S&P 500 companies to report earnings this season have exceeded expectations, according to Bloomberg.
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