U.S. Stocks Down As Google, Caterpillar Earnings Fall Short
NEW YORK (MarketWatch) -- Stocks declined Friday, as enthusiasm seen this week for technology and other earnings faded after Google Inc. and Caterpillar Inc.'s results fell short of expectations.
"The bulls remain in control, but may get tested today with Google's decline," said Marc Pado, market strategist at Cantor Fitzgerald. "There is enough positive news for the big picture, but sometimes traders get distracted."
The Dow Jones Industrial Average lost 104 points to 13,895, as 21 of its 30 components fell.
Among Dow components, Caterpillar Inc. lost 8.9% after posting a 21% decline in profits on lower sales of truck engines and weakness in the construction market.
And Microsoft Corp. fell 2%, after the software giant posted in-line profit growth.
Bucking the negative trend among blue chips, Citigroup rose 0.9%. Helping to soothe recent concerns about financial shares, the bank reported an 18% profit rise.
The S&P 500 fell 10.3 points to 1,542, while the Nasdaq Composite eased 26.3 points to 2,693.
Trading volumes had 542.9 million shares exchanged on the New York Stock Exchange and 555.6 million trading hands on the Nasdaq. Declining issues topped gainers by 3-1 on the NYSE and by 4-1 on the Nasdaq.
Techs fall
Google dipped 6.3%. The Internet-search giant said quarterly profit growth rose 28% but still fell short of Wall Street's expectations.
On Thursday, the market advanced, helping send the Dow to its first-ever close above 14,000, led by upbeat earnings from tech firms, including International Business Machines .
Financial shares had taken another hit, however, after Standard & Poor's downgraded more mortgage-backed securities and Federal Reserve Chairman Ben Bernanke warned of $100 billion in losses from subprime mortgage defaults.
Friday's upbeat results from Citigroup didn't help the sector much in early action.
Wachovia Bank , whose earnings also topped estimates, fell 2.6%.
China hike
Adding to global concerns, China's central bank on Friday hiked interest rates by 0.27%. But the move came a day after China said its growth in the second quarter was a whopping 11.9%.
"With global growth continuing to explode, our lower dollar making our exports more competitive, and with an estimated 40% of S&P revenues coming from overseas, large multinational companies are [...] leading the market higher," said Cantor Fitzgerald's Pado.
Other markets
The dollar rose slightly against the euro and the yen early Friday, continuing to recover from multi-year lows it hit earlier this week.
"The U.S. calendar is bare going into the weekend, so activity overall may continue to be muted," said analysts at research firm Action Economics.
Crude oil futures climbed to more than $76 a barrel on the back on falling supplies and expectations for a strong global economy. James Neale, an analyst at Citigroup, said the market overreacted to news that Total declared a force majeure at its recently commissioned Angola field.
Bonds rose slightly, with the benchmark 10-year Treasury bond gaining 4/32 to 96 4/32, yielding 5.001%.
By Kate Gibson