US stocks drop on global growth worries; Caterpillar slumps

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NEW YORK (AP) — More evidence that global economic growth is slowing pushed the US stock market down for a third straight day on Thursday.

The market fell sharply at the open, pushing stocks close to their lowest levels of the month, before rebounding during afternoon trading to close with only slight losses.

Caterpillar, a bellwether for industrial companies, fell sharply after cutting its sales outlook for this year and announcing that it would eliminate as many as 10,000 jobs to cut costs.

Also, the government reported that orders for long-lasting U.S. manufactured goods dropped in August. A key category that tracks business investment plans was especially weak.

"We're looking for that good news and we're not getting any," said John Toohey, vice president of equity investments at USAA.

The Standard & Poor's 500 index fell 6.52 points, or 0.3 percent, to 1,932.24. The Dow Jones industrial average lost 78.57 points, or 0.5 percent, to 16,201.32. The Nasdaq composite fell 18.27 points, or 0.4 percent, to 4,734.48.

The market has been in a funk for the past month as investors worry that slowing growth overseas, particularly in China, will hurt U.S. companies. A decision by the Federal Reserve to hold its benchmark interest rate close to zero this month also made investors uneasy.

Investors will closely follow a speech on inflation and monetary policy later Thursday by U.S. Federal Reserve Chair Janet Yellen. The Fed has rate-setting meetings in October and December and investors are looking for clues on the possible timing of the Fed's first interest-rate hike in nearly a decade.

Policymakers held the Fed's benchmark interest rate close to zero despite an improving job market and a steady economy. Yellen told reporters after the meeting that worries about China and emerging markets were a factor in their decision.

"She, in essence, moved the goal posts," said Quincy Krosby, a market strategist for Prudential Financial. "That just made the market think, 'Hey, does this mean we're never going to have a rate increase?'"

The S&P 500 has fallen 9.2 percent since setting a record close of 2,130.82 in May and is on track for its second straight month of losses.

On Thursday, Caterpillar was the biggest decliner in the S&P 500.

The company slumped after cutting its 2015 revenue forecast by $1 billion to about $48 billion. Caterpillar also said sales would fall another 5 percent next year. The company said it may eliminate as many as 10,000 jobs between now and 2018. The maker of mining and construction equipment is suffering as a global slump in commodity prices hurts mining companies. The stock dropped $4.40, or 6.3 percent, to $65.80.

European markets also fell. Germany's DAX dropped 1.9 percent, Britain's FTSE 100 declined 1.2 percent and France's CAC 40 lost 1.9 percent.

Automakers in Europe are still suffering in the wake of Volkswagen's emissions scandal. While VW's stock closed flat on the day, fellow German carmaker BMW fell 5.2 percent after a report said one of its models had failed a test in Europe. Fiat Chrysler fell 7.5 percent.

In commodities trading, benchmark U.S. crude rose 43 cents to $44.91 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for many international oils imported by U.S. refineries, rose 42 cents to $48.17 a barrel.

Bond prices rose, pushing the yield on the 10-year Treasury note down to 2.12 percent from 2.15 percent a day earlier. The dollar slipped to 120.06 yen. The euro ticked higher to $1.1221.

The price of gold rose $22.30 to $1,153.80 an ounce. Silver climbed 34 cents to $15.13 an ounce and copper rose 0.7 cents to $2.30 a pound.

In other futures trading on the NYMEX:

— Wholesale gasoline fell 1.6 cents to close at $1.365 a gallon.

— Heating oil rose 1.8 cents to close at $1.524 a gallon.

— Natural gas rose 2.2 cents to close at $2.591 per 1,000 cubic feet.

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