MercoPress. South Atlantic News Agency

Poor earnings and housing slump push US markets down

United States stocks fell sharply on Friday following disappointing earnings from Caterpillar and Google. Worries over the impact of the housing slump and losses from risky mortgages also weighed on stocks.

Heavy equipment maker Caterpillar Inc. said quarterly earnings fell more than expected due to a sharp drop in truck engine sales and weakness in North American construction. Its stock tumbled 8.4%. Web media company Google Inc. also reported earnings that missed expectations due to increased hiring and a jump in operating expenses, while shares of fellow tech bellwether Microsoft Corp. slid after its results disappointed investors. Google was the heaviest weight on both the Nasdaq 100 index and the S&P 500. The Dow Jones industrial average was down 176.07 points, or 1.26% at 13,824.34, after closing above 14,000 for the first time on Thursday. Prospects in the housing market also had an impact on financial shares as a drop in junk bonds signaled a fresh wave of worry about the state of the mortgage market. Comments on housing by St. Louis Federal Reserve Bank President William Poole added to concerns. Poole said the nonprime mortgage market was big enough to affect home building activity and consumer spending. In money markets the US dollar hovered near record lows against the Euro and sterling as worries about the U.S. housing market continued to weigh on the U.S. currency. Minutes from the Federal Reserve's latest meeting added fuel to market jitters, and appeared to dash hopes for an interest rate cut. The 13-nation Euro climbed to 1.3803 in late New York trading, up from 1.3795 overnight, but below the record high of 1.3833 reached early Wednesday. Britain's pound also ranged near its highest point in more than a quarter-century, trading at 2.0486, but down from 2.0533. However the dollar strengthened against the Japanese currency, rising to 122.06 yen from 121.89 yen. The fear that inflation will fail to ease as anticipated remained the "predominate concerns" among members of the Federal Reserve's Open Market Committee, according to minutes released Thursday from the committee's June 27-28 meeting. The minutes suggested that the Fed is unlikely to cut interest rates anytime soon in order to fend off economic slowdown.