Stocks in U.S. rattled by 3M, Caterpillar

U.S. markets spent most of the day deep in the red on one of the busiest earnings sessions of the year as a global sell-off and a disappointing report by 3M — a major industrial company that is a window into the U.S. economy — sent nervous investors out of stocks.

By close of trading, all three indices had pared significant early losses. The Dow Jones Industrial Average was down 548 points at its low — and ended the day down 126 points, or 0.5 percent, to land at 25,191.43.

The Standard & Poor’s 500-stock index lost 0.6 percent, its fourth decline in as many days. The techheavy Nasdaq, which has been whacked in recent weeks from the sell-off in the so-called FAANG shares — Facebook, Amazon.com, Apple, Netflix and Alphabet’s Google, Alphabet — was off 0.4 percent.

All three had slipped to three-month lows in volatile morning trading.

“Politics and earnings,” said Sam Stovall, chief investment strategist of U.S. Equity Strategy at CFRA. “Both 3M and Caterpillar appear to be spinning their wheels and showing the true effects of global tensions.”

3M and Caterpillar, another benchmark, fell sharply in trading as the companies failed to project robust outlooks for the rest of 2018. Caterpillar warned dealers worldwide that it would raise prices because of the growing cost of steel. The companies are closely followed because they have huge international sales and are seen as economic crystal balls.

Ed Yardeni, president of Yardeni Research, said Tuesday morning on CNBC that he has counted 62 “panic attacks” in the current bull market, including October’s sell-off.

“The question is, is this a panic attack or something more?” he said. “I think this too shall pass. This will just turn out to be another (buying) opportunity.”

Another factor weight on the markets is the Federal Reserve’s commitment to gradually raising interest rates, which has drawn criticism from President Donald Trump. Presidents historically prefer low interest rates because they help boost the economy and, in turn, help whoever is in the Oval Office.

Rate increases have raised the U.S. 10-year Treasury bond to around 3.2 percent, its highest rate in years. The 10-year is closely followed because it is another indicator of the economy and the future of the stock market. Higher interest rates on the 10-year could steer away investors, who could sell equities in return for the less-risky Treasury note.

U.S. markets were roiled in early morning hours from the steep decline across the board in Asia, reversing a slight Monday rally overseas. The Japanese Nikkei 225, China’s wheezing Shanghai Composite and Hong Kong’s Hang Seng all fell more than 2 percent.

Europe was down, too, with the London FTSE 100 down nearly 1 percent, the German DAX down 1.8 percent and the Frech CAC 40 dropping slight more than 1 percent.