Stocks take tumble on growth fears
NEW YORK — After a strong start, U.S. stocks abruptly sold off yesterday after machinery maker Caterpillar said it doesn’t expect to top its first-quarter profit for the rest of the year. The Dow Jones industrial average plunged as much as 619 points as investors feared that rising oil prices and other costs will slow down growth in company profits.
Stocks climbed in early trading as companies like Caterpillar, appliance maker Whirlpool, and Fifth Third Bancorp posted strong quarterly results. Then Caterpillar executives told analysts on a conference call in the late morning that they don’t expect the company to report a larger per-share profit for the rest of 2018. Other industrial, technology and basic materials companies also took sharp losses.
The S&P 500 index sank 35.73 points, or 1.3 percent, to 2,634.56. The Dow Jones industrial average finished with a loss of 424.56 points, or 1.7 percent, to 24,024.13. The Nasdaq composite dropped 121.25 points, or 1.7 percent, to 7,007.35.
Small-company stocks held up better than the rest of the market. The Russell 2000 index declined 8.84 points, or 0.6 percent, to 1,553.28, about half as much as the S&P 500, which tracks large U.S. companies.
Caterpillar’s products are used in a wide variety of industries including construction, power generation, mining and oil and gas drilling. Meanwhile 3M, which makes Post-it notes and industrial coatings and ceramics, said the rising price of oil and other materials is affecting its business.
The companies’ statements came as interest rates kept rising, which makes it more expensive for companies to borrow money. The yield on the 10-year Treasury note rose to 3 percent for the first time in more than four years.