Stocks edge lower on Caterpillar earnings miss (AP)

A big earnings miss from Caterpillar halted a stock rally that brought the Dow Jones industrial average close to its highest level of the year.

Caterpillar fell nearly 6 percent after the equipment maker earned less than analysts projected last quarter. The company, which is often seen as a bellwether for the global economy because it sells equipment all over the world, told analysts in its earnings call that it expects the U.S. economy to grow moderately.

The weaker results from Caterpillar and a continuing deadlock over raising the U.S. borrowing limit capped the stock market’s gains and left the U.S. out of a broad rally in overseas markets. Stocks gained worldwide after European leaders reached a deal aimed at containing the region’s debt crisis.

The Dow Jones industrial average fell 20 points, or 0.2 percent, to 12,704. The broader Standard Poor’s 500 index gained 2, or 0.1 percent, to 1,346.

A strong earnings report from Advanced Micro Devices Inc. helped push technology stocks higher. The Nasdaq composite rose 17 points, or 0.6 percent, to 2,851.

AMD jumped nearly 19 percent after the chip maker said it expects more earnings gains in the third quarter. Flash memory card maker SanDisk Corp. rose 10 percent

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Dow drops as Caterpillar profit misses view (Reuters)

NEW YORK (Reuters) – The Dow fell on Friday after disappointing results from Caterpillar and Microsoft, reversing optimism after a strong week of earnings.

Caterpillar Inc (CAT.N) fell 5.2 percent to $105.80 after its profits missed estimates and it said the U.S. recovery was weaker than expected.

The heavy equipment maker has an out-sized influence on markets because it is seen as a barometer of economic activity.

Caterpillar’s stock, the best performing Dow component in 2010, was the average’s top drag on Friday.

Microsoft Corp (MSFT.O) posted a greater-than-expected jump in fourth-quarter profit but sales of its flagship Windows software disappointed for the third straight quarter. The Dow component dipped 0.1 percent to $27.07.

“We had a little bit of shortfall from Caterpillar,” said Anthony Conroy, head trader at BNY ConvergEx, an affiliate of the Bank of New York. “It’s taking the market off a little bit.”

He noted that stocks have had “a nice run-up in the past couple of days,” explaining some of the selling.

The Dow Jones industrial average (.DJI) was down 47.30 points, or 0.37 percent, at 12,677.11. The Standard Poor’s 500 Index (.SPX) dipped 2.03 points, or 0.15 percent, at 1,341.77. The Nasdaq Composite Index (.IXIC) was up 6.28 points, or

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Stocks edge lower on Caterpillar earnings miss

John Bowers, right, of Bowers Securities makes trades using a handheld device on the floor of the New York Stock Exchange Friday, July 22, 2011. (AP Photo/Bebeto Matthews)

SymbolPriceChangeAMD7.61+1.11CAT105.64-5.96MCD89.14+2.60MSFT27.21+0.12SLB93.98+3.02{“s” : “amd,cat,mcd,msft,slb,sndk”,”k” : “a00,a50,b00,b60,c10,g00,h00,l10,p20,t10,v00?,”o” : “”,”j” : “”}

A big earnings miss from Caterpillar halted a stock rally that brought the Dow Jones industrial average close to its highest level of the year.

Caterpillar fell nearly 6 percent after the equipment maker earned less than analysts projected last quarter. The company, which is often seen as a bellwether for the global economy because it sells equipment all over the world, told analysts in its earnings call that it expects the U.S. economy to grow moderately.

The weaker results from Caterpillar and a continuing deadlock over raising the U.S. borrowing limit capped the stock market’s gains and left the U.S. out of a broad rally in overseas markets. Stocks gained worldwide after European leaders reached a deal aimed at containing the region’s debt crisis.

The Dow Jones industrial average fell 20 points, or 0.2 percent, to 12,704. The broader Standard Poor’s 500 index gained 2, or 0.1 percent, to 1,346.

A strong earnings report from Advanced Micro Devices Inc. helped push technology stocks higher. The Nasdaq composite rose 17 points, or 0.6 percent, to 2,851.

AMD jumped nearly 19 percent after the chip maker said it expects more earnings gains in the third quarter. Flash memory card maker SanDisk Corp. rose 10 percent after its earnings rose sharply. And Microsoft Corp. gained 0.3 percent after beating analyst’s income estimates.

Traders kept close watch on negotiations in Washington over a deal to raise the nation’s debt ceiling ahead of an Aug. 2 deadline. The impasse has overshadowed an agreement in Europe Thursday to give Greece a second financial lifeline and broaden the powers of a regional bailout fund.

Republicans and Democrats continue to search for a deal to cut the government deficit that would combine cuts to social programs with revenue increases through an overhaul of the tax code.

Concerns that the debt ceiling won’t be raised before the August deadline are becoming more widespread, said Brian Gendreau, market strategist for Cetera Financial Group. “But the background is a growing economy and fairly strong earnings news.”

McDonald’s Corp. rose 3 percent, the most of any stock in the Dow average, after the company’s income and revenue came in higher than analysts were expecting thanks to strong sales in Europe. CEO Jim Skinner said the company’s low prices helped bring in more customers as the economic recovery stumbled. Oil services company Schlumberger Ltd. rose 4 percent after its profits increased on a pickup in drilling in North America.

The Dow has gained more than 200 points this week. It opened Friday 86 points below its high for the year of 12,810.54, which came on April 29.

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