Stocks sputter after hitting '10 highs

By Alexandra Twin, senior writer

NEW YORK ( -- The Dow managed to eke out a fresh 19-month high Monday on Caterpillar's strong earnings, but a selloff in financials hit the broader market at the start of a busy week on Wall Street.

The Dow Jones industrial average (INDU) ended just above unchanged, with Caterpillar (CAT, Fortune 500) and a few other stocks countering the weakness in financials.

Quarterly results
Roughly 25% of the S&P 500 reports this week. Here are the standouts.
Day Company Earnings Revenue
T 3M +50% +17%
T DuPont +96% +18%
T UPS +51% +9%
W AOL -12% NA
W Sprint Nextel -17% -2%
TH Exxon Mobil +52% +51%
TH Procter & Gamble -3% +6%
F Chevron +170% +47%
Source:Thomson Reuters. Year-over-year forecasts are based on a consensus of analysts surveyed by the company.
What should be the top priority of Fortune 500 companies?
  • Satisfying customers
  • Retaining top talent
  • Answering to shareholders
  • Taking care of workers

The S&P 500 index (SPX) lost 5 points, or 0.4%, after ending Friday's session at a 19-month high.

The Nasdaq composite (COMP) lost 7 points, or 0.3%, after ending the previous session at the highest point in almost two years.

Stocks seesawed through the session as investors welcomed Caterpillar's earnings and forecast but showed reluctance at the start of a busy week. Financial concerns continued to drag on the market.

Stocks gained Friday after a surprisingly strong new-home sales report, with the Dow, Nasdaq and S&P 500 all gaining on the week as well. The Dow has now gained eight weeks in a row, the longest wining streak since January 2004.

Although there are no economic reports due Monday, the pace picks up later in the week. The Fed's two-day policy meeting concludes Wednesday, with a statement due in the afternoon, while reports on jobless claims, consumer confidence and gross domestic product are also on tap.

While the trend for the market remains up, there are still headwinds, including any fallout from Goldman Sachs' fraud charge, the debate over financial reform and Greece's lingering debt issues.

Financials: Goldman Sachs (GS, Fortune 500) shares fell ahead of a Senate hearing Tuesday aimed at investigating the role investment banks played in the 2008 financial crisis. Goldman CEO Lloyd Blankfein, Fabrice Tourre, the only Goldman employee named in the SEC's fraud charge, and other Goldman employees will be among those testifying.

E-mails released Monday showed that Tourre -- who helped create a bond deal tied to subprime mortgages that regulators say defrauded investors -- knew the complex deals were bunk.

The federal government said it will sell up to 1.5 billion shares in Citigroup (C, Fortune 500), in its latest move toward withdrawing some of the support for big banks it put in place during the height of the financial crisis. The sales are equivalent to about one-fifth of the government's ownership stake and would reduce its holdings to roughly 22% of the company.

Shares plunged 5%.

Other bank shares fell too, dragging the KBW Bank (BKX) sector index down 3%.

Quarterly results: Heavy-machinery maker Caterpillar (CAT, Fortune 500) reported higher quarterly earnings that beat estimates on weaker revenue that missed estimates. The company said that the economic outlook is improving, but that it is cutting its outlook for housing starts by 20% due to the weak labor market. The Dow component also boosted its 2010 profit forecast. Shares gained 4.2%.

Whirlpool (WHR, Fortune 500) reported higher quarterly sales and earnings that beat estimates due to stronger sales of its appliances both domestically and abroad. The company also reported a stronger 2008 profit. Shares gained 14%.

With roughly 34% of the S&P 500 having reported results, earnings are currently on track to have risen 50% from a year ago, while revenues are on track to have risen 11%, according to tracker Thomson Reuters.

So far, about 83% of earnings and 81% of revenues have topped estimates.

Corporate news: Hertz (HTZ, Fortune 500) said it will buy Dollar Thrifty in a $1.2 billion cash and stock deal that combines the two car rental companies.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by eight to seven on volume of 1.23 billion shares. On the Nasdaq, decliners topped advancers by a narrow margin on volume of 2.38 billion shares.

The dollar and commodities: The dollar gained versus the euro and yen.

U.S. light crude oil for June delivery fell 92 cents to settle at $84.20 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose 30 cents to settle at $1,153.70 per ounce.

World markets: In overseas trading, European markets rallied, with London's FTSE up 0.5%, France's CAC 40 up 1.2% and Germany's DAX up 1.2%. Asian markets fell, with Hong Kong's Hang Seng index up 1.6% and Japan's Nikkei up 2.3%.

Bonds: Treasury prices were little changed, with the yield on the 10-year note at 3.82%, unchanged from late Friday. Treasury prices and yields move in opposite directions. To top of page

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Ford Motor Co 8.29 0.05 0.61%
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