Nasdaq rebounds but weak results weigh on Dow, S&P

By Tanya Agrawal

REUTERS - The Nasdaq composite edged up on Thursday after two days of losses, while the S&P 500 and Dow were lower on weak earnings from bellwethers such as 3M and Caterpillar .

The two stocks, together with American Express , contributed 104 points to Dow's fall.

Caterpillar shares fell as much as 3.4 percent to a four-year low of $77.03 after the world's largest construction and mining equipment maker reported sales decline in key markets in a sluggish global economy.

American Express fell 2.9 percent to $77.66 as revenue missed expectations while 3M was down 2.3 percent at $151.72 after the diversified manufacturer cut its full-year forecasts.

"Companies such as Caterpillar are a litmus test for the global economy especially when the market is concerned about China's economy," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Luschini said strong results from General Motors was helping offset some of the losses by Caterpillar and 3M. General Motors jumped 6.4 percent to $32.21 after its adjusted net income more than doubled in the second quarter.

On Wednesday, Wall Street declined as the technology sector fell on disappointing results from giants such as Apple and Microsoft .

Corporate earnings will continue to drive the market with a host of big companies scheduled to report on Thursday.

Dow component Visa , Amazon and AT&T are expected after the close.

While markets remain near record highs, June-quarter S&P 500 earnings are expected to dip 1.5 percent, according to Thomson Reuters data, less than the 3-percent decline expected at the start of July.

Of the companies that have reported so far, 70 percent beat earnings expectations, above the 63-percent average beat rate since 1994.

However, only 55 percent have topped revenue forecasts, below the 61-percent average beat rate since 2002.

"Lack of revenue growth is definitely worrisome because at some point hiring is going to pick up and that will affect margins which will reduce financial engineering," said Luschini.

At 9:53 a.m. ET (1353 GMT), the Dow Jones industrial average was down 40.45 points, or 0.23 percent, at 17,810.59, the S&P 500 was down 1.13 points, or 0.05 percent, at 2,113.02 and the Nasdaq Composite was up 7.37 points, or 0.14 percent, at 5,179.14.

Six of the 10 major S&P 500 sectors were lower with the utilities index leading the decliners with a 1.24 percent fall.

SanDisk jumped 17.5 percent to $63.68, a day after the data storage products maker reported a quarterly profit that was double of what analysts had expected.

Cigna rose 2.8 percent to $155.35 after reports said U.S. health insurer Anthem was close to finalizing negotiations to acquire the company in a deal valued at roughly $48 billion. Anthem edged up to $159.95.

The number of Americans filing new applications for unemployment benefits last week fell to its lowest level in more than 41-1/2 years, suggesting job growth remained solid despite slowing in June.

Advancing issues outnumbered decliners on the NYSE by 1,404 to 1,357. On the Nasdaq, 1,256 issues rose and 1,033 fell.

The S&P 500 index showed 20 new 52-week highs and 18 new lows, while the Nasdaq recorded 63 new highs and 47 new lows.

(Editing by Don Sebastian)