US stocks: US blue chips end lower, Caterpillar weighs

NEW YORK - US blue chip stocks closed lower Thursday (US time), snapping a two-day winning streak, as disappointing earnings from companies such as Caterpillar Inc. put pressure on the Dow, but gains in Cisco Systems Inc. helped the tech-heavy Nasdaq nudge higher.

Cisco, a Nasdaq and S&P 500 component, rose nearly 3 per cent, or 49 cents to US$18.18, after Lehman Brothers forecast mostly strong first-quarter results. The company, the biggest maker of gear to direct internet traffic, reports results in early February.

Also helping the S&P 500 was Colgate-Palmolive Co., up 5.6 per cent, or US$2.81 to US$52.69, after J.P. Morgan raised its investment rating on the consumer products company to "overweight" from "neutral".

After the closing bell, Microsoft Corp., the world's largest software maker, said its quarterly profit and revenue rose on stronger demand for personal computers as well as healthy sales in its video games business.

Microsoft rose just over 1 per cent to US$26.42 on the Inet electronic brokerage system. Its shares closed the ordinary trading session up 10 cents at US$26.11.

The Dow Jones industrial average ended down 31.19 points, or 0.30 per cent, at 10,467.40. The Standard & Poor's 500 Index was up 0.48 points, or 0.04 per cent, at 1,174.55. The Nasdaq Composite Index was up 1.06 points, or 0.05 per cent, at 2,047.15.

The lackluster close dampened a two-day rally -- which saw stocks bounce off 2005 lows hit on Monday.

Earnings were the principal focus, on the heaviest day so far this quarter for corporate reports.

"Broadly it's been a challenging quarter," said Jack Caffrey, equity strategist at JP Morgan Private Bank.

"For the most part, numbers have been basically in line. But the challenge is that companies are being somewhat muted with respect to their guidance.

"Instead of in-line reports with good outlooks, we're getting in-line reports with somewhat muted outlooks. It's good, but not quite as good as some people had been hoping for," Caffrey said.

Meanwhile, oil prices held close to the US$49-a-barrel mark, causing renewed concerns about corporate profit margins and consumer spending.

NYMEX March crude settled 6 cents higher at US$48.84 a barrel, as traders braced for potential disruptions before Iraq's elections on Sunday and worried about a possible surprise supply cut from Opec ministers' meeting this weekend.

Investors were also looking ahead to next week's meeting of the US Federal Reserve, when interest rates are expected to be hiked further.

Among stocks declining Thursday was Caterpillar, which fell 5 per cent, or US$4.60 to US$86.52, and dragged down other construction equipment stocks, after it missed Wall Street estimates with its quarterly earnings.

Coffee shop chain Starbucks Corp. fell more than 4 per cent, or US$2.31 to US$53.03 on disappointment that its earnings, posted after the bell Wednesday, didn't beat expectations by a wider margin.

Amgen Inc., the world's largest biotechnology company, fell 3 per cent, or US$1.98 to US$61.58 after it said that excluding one-time items, its fourth-quarter earnings missed analysts' estimates.

However, long-distance communications company AT&T Corp. jumped 6.2 per cent, or US$1.15 to US$19.60, as sources said that telephone company SBC Communications Inc. is in talks to buy it.

But SBC, a Dow component, fell 91 cents to US$23.67, a 3.7 per cent decline.

United Parcel Service Inc., the world's largest package delivery company, slid 2 per cent to US$74.01 after it said quarterly net earnings missed its forecast.

But Altria Group Inc., maker of Marlboro cigarettes and majority owner of Kraft Foods Inc. -- rose 79 cents to US$62.63 a day after it said that excluding one-time items, earnings from continuing operations beat estimates.

Microsoft closed ordinary trading session up 10 cents to US$26.11.

Overall, trading was active, with 1.6 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 2.1 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by 9-to-7. On Nasdaq, decliners outnumbered by 8-to-7.

- REUTERS