US STOCKS-Wall Street slides on growth concerns
(Updates to late afternoon)
NEW YORK, Oct 19 (Reuters) - Major U.S. stock indexes fell nearly 2 percent on Friday after heavy-equipment maker Caterpillar Inc (CAT.N) cut its profit forecast and warned the housing slump was spilling over into other parts of the economy.
With investors mindful of the 20th anniversary of the 1987 stock market crash, the Dow and the S&P tumbled as Caterpillar said the U.S. economy will be "near to, or even in, recession" next year.
Caterpillar also said several of the key U.S. industries it serves were already in recession.
The bleak comments from the economic bellwether, whose stock fell 5.4 percent, helped drag down the shares of other big manufacturers, including 3M Co. (MMM.N), and contributed to investors' shift from stocks to the relative safety of U.S. government debt.
A drop in revenue at Schlumberger Ltd (SLB.N), the world's largest oil service company, sent its shares down 10.4 percent. Energy companies such as Exxon Mobil (XOM.N) fell, as oil prices retreated from record highs.
"It's been a pretty tough day," said Linda Duessel, market strategist at Federated Investors, in Pittsburgh. "People are saying there could be a recession because Caterpillar gave some cautionary comments."
The Dow Jones industrial average .DJI was down 282.80 points, or 2.04 percent, at 13,606.16. The Standard & Poor's 500 Index .SPX was down 29.85 points, or 1.94 percent, at 1,510.23. The Nasdaq Composite Index .IXIC was down 53.76 points, or 1.92 percent, at 2,745.55.
Shares of 3M Co (MMM.N) fell 7.3 percent to $87.85 on worries about falling profits in the LCD television market. Caterpillar fell 5.6 percent to $73.32. Investors watch large manufacturers like 3M and Caterpillar for clues on the strength of the U.S. economy.
The S&P financial index .GSPF was on track for its first weekly drop since the Federal Reserve cut interest rates on Sept. 18 -- a cut that was meant, in part, to allay concerns about the effects of the credit crunch.
Wachovia Corp WB.N, the fourth-largest U.S. bank, posted a 10 percent drop in quarterly profit, hurt by $1.3 billion of write-downs at its investment banking unit as credit markets tightened. For details, see [ID:nN19241105] Wachovia fell 2.8 percent to $46.81 on the New York Stock Exchange.
Exxon Mobil Corp (XOM.N) shares dropped 2.3 percent to $92.89 as U.S. crude shed 86 cents to $88.61 after rising to a record $90.07 a barrel overnight. Schlumberger shares dropped 10.4 percent, or $11.62, to $100.00.
The market's decline coincided with the 20th anniversary of "Black Monday," when the Dow industrials fell nearly 23 percent on Oct. 19, 1987.
