NEW YORK -- U.S. stocks were mixed yesterday after a profit warning from Caterpillar Inc. sparked concern that third-quarter earnings won't match expectations.
That outlook helped shares of fast-growing technology companies.
Caterpillar, a construction equipment maker whose profits are seen as a bellwether of economic activity, surprised investors when it said earnings won't match year-ago results. The warning fueled concern that cyclical companies may be set up for a fall.
The Dow Jones industrial average closed down 13.37, at 4,767.04, after being down 49.86 points. It was the average's third straight drop after reaching a record 4,801.8. Caterpillar tumbled $6.50, to $58.625, and it alone shaved 18 points from the 30-stock average. Shares of International Business Machines Corp. rose $2.625, to $96.75, helping the Dow industrials regain ground late in the day.
Standard & Poor's 500 index rose 1.43, to a record 584.2, after being down 2.02, at 580.75. Shares of computer, software and financial companies rose the most, offsetting drops in machinery, paper and retail issues.
The Nasdaq composite index, filled with technology stocks, rose 10.14, to 1,060.32, overcoming some of the losses that drove it from a record 1,067.4 Sept. 13.
Advancing stocks matched decliners on the New York Stock Exchange, where more than 371.1 million shares changed hands. The three-month daily average is 340 million shares.
After sliding for most of last week, technology shares rebounded as some investors said the companies will post strong earnings gains no matter how the economy fares.
Applied Materials' stock rallied $2.50, to $103.50; Microsoft Corp. gained $1.3125, to 93.3125; Oracle Corp. rose 37.5 cents, to $40.125; and Bay Networks Inc. spurted $5, to $56. The Philadelphia semiconductor index added 7.17 points, or 2.5 percent, to 291.59. The index fell 5.7 percent the previous five days.
Among broad market indexes, the Russell 2000 index of small capitalization stocks rose 0.53, to 313.87; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock markets, rose 19.16, to 5,819.13; the Amex market value index slid 0.75, to 547.12; and the S&P; 400 midcap index rose 1.27 to 217.84.
Yesterday's most active stocks in U.S. composite trading were Freeport McMoRan Inc., Intel, Royal Dutch Petroleum Co.'s American depositary receipts, Integrated Device Technology Inc. and Micron Technology Inc.
At the same time Caterpillar was making its prediction, semiconductor equipment company Applied Materials Inc. said its revenue for the fourth quarter ending Oct. 31 could double from the same period last year.
Crown Cork & Seal Co.'s stock tumbled $5.375, to $38.75. The packaging company said it expects its second-half 1995 earnings, before charges, will fall below earnings of $55 million a year ago because of higher raw material costs, lower demand and a strike at two Canadian plants.
Shares of Caterpillar tumbled $7.50, to $57.875, after being halted for a half-hour. Before the announcement, the company's earnings were expected to rise to $1.28 a share from $1.20 a year earlier. Also late yesterday, Nucor Corp. said it would cut the price of sheet steel because of weak demand.
Caterpillar's drop sparked a decline in other cyclical stocks. Shares of Deere & Co. fell $1.50, to $85.25; Ingersoll-Rand Co. dropped 87.5 cents, to $38.125; Varity Corp. slid 25 cents, to $45.375; and Timken Co. weakened $1, to $44.875. Nucor's stock fell $1.25, to $44.75.
The profit announcement from Caterpillar and Nucor's outlook dampened the outlook on stocks, which rallied to record highs last week on optimism that the economy will remain robust enough to support record profit gains -- and still leave room for an interest rate cut.
America Online Inc.'s stock closed up $2.125, at $70.125. The company said it filed to sell 3.5 million shares of common stock to pay for expansion