Stocks mostly fall on earnings news; tech rises

Stocks are falling after heavy-equipment maker Caterpillar Inc. reported weak results in the second quarter, sowing doubts about the pace of the global recovery.

The weaker results from Caterpillar and a continuing deadlock over raising the U.S. borrowing limit pushed stocks lower. Overseas markets rose after European leaders reached a deal aimed at containing the region’s debt crisis.

Caterpillar, the world’s largest maker of construction and mining equipment, earned less than analysts expected last quarter. That offset positive earnings reports from McDonald’s and Schlumberger, a major oil company.

Caterpillar’s shares fell 7 percent, the most of any stock in the Dow Jones industrial average. Because they sell their equipment all over the world, investors see Caterpillar’s earnings as an indicator of how well the global economy is doing.

The Standard & Poor’s 500 index fell 6 points, or 0.5 percent, to 1,338 in morning trading. The Dow Jones industrial average fell 76, or 0.6 percent, to 12,648. The Nasdaq composite index fell 3, or 0.1 percent, to 2,831.

Technology stocks were the only industry group in the S&P 500 to rise.

Advanced Micro Devices Inc. shares jumped 14 percent after the chip maker’s strong second-quarter results gave traders confidence that it has found direction after unexpectedly ousting its CEO six months ago. AMD said it expects another round of strong earnings in the third quarter.

Flash memory card maker SanDisk Corp. rose 9 percent after its earnings rose sharply. The company’s mobile business increased as people bought more smartphones and tablet computers.

McDonald’s Corp. rose 3 percent. The company’s income and revenue came in higher than analysts were expecting thanks to strong sales in Europe. CEO Jim Skinner said the company’s low prices helped bring in more customers as the economic recovery stumbled.

Oil services company Schlumberger Ltd. rose 2 percent after growth in North American drilling raised its profits in the second quarter. The company reported earnings of 98 cents per share, beating the 85 cents analysts expected.

Among the laggards, Verizon Communications Inc. fell 1 percent even after its income came in slightly higher than analysts expected. Chief Operating Officer Lowell McAdam will take over from long-time CEO Ivan Seidenberg on Aug. 1. The company has signaled the succession for the past year.

C.R. Bard plummeted 8 percent after the medical device maker took a $300 million charge to settle lawsuits stemming from defective devices implanted in hernia patients. Fitch ratings service put the company’s debt on notice for a possible downgrade.

Traders kept close watch on negotiations in Washington over a deal to raise the nation’s debt ceiling before an Aug. 2 deadline. The impasse has overshadowed an agreement in Europe Thursday to prop up Greece with a second financial lifeline.

Republicans and Democrats continue to search for a deal to cut the government deficit that would combine cuts to social programs with revenue increases through an overhaul of the tax code.

Talks in Europe Thursday were more productive, with officials agreeing to a rescue package for Greece worth about $155 billion. They also decided to lower interest rates and lengthen payback terms for loans to Greece, Ireland and Portugal.