Caterpillar forecast sends stocks plunging; Dow down 500

NEW YORK - U.S. stocks are sinking Tuesday as investors fear that growth in company profits will slow down. The worries began to set in after construction and mining equipment maker Caterpillar said it doesn't expect to top its first-quarter profit for the rest of this year. Industrial and basic materials companies and technology firms are taking some of the worst losses as the Dow Jones industrial average fell as much as 619 points.

KEEPING SCORE: The S&P 500 index sank 42 points, or 1.6 percent, to 2,626 as of 2:15 p.m. Eastern time. It was up as much as 13 points in the morning. The Dow Jones industrial average was down 503 points, or 2.1 percent, to 23,945. The Nasdaq composite dropped 144 points, or 2 percent, to 6,984.

Small-company stocks held up slightly better than the rest of the market. The Russell 2000 index declined 13 points, or 0.9 percent, to 1,548.

INDUSTRIAL WEAKNESS: Caterpillar had a strong first quarter, but company executives told analysts on a conference call in the late morning that the company doesn't expect to report a larger per-share profit for the rest of the year. The stock dropped 6.6 percent to $143.76.

Wall Street had cheered Caterpillar's results earlier in the day. The company said the strong global economy helped its sales of construction and energy industry machinery and it raised its forecasts for the year.

3M, which makes Post-it notes and industrial coatings and ceramics, shed 8.6 percent to $197.35 after cutting its annual forecast. 3M said raw materials costs are rising, especially for materials derived from crude oil, whose price has been rising, and transportation and logistics expenses are rising as well. Chemical companies and other materials makers could also see their profits affected as oil prices and other expenses rise. DowDuPont shed 4.4 percent to $62.73.

Elsewhere, defense contractor Lockheed Martin sank 7.3 percent to $332.28 and Boeing lost 4.3 percent to $324.40.

THE QUOTE: Stocks shot up at the end of 2017 and the start of 2018 as investors bet that the recent corporate tax overhaul would lead to bigger profits for American companies and greater economic growth. Gina Martin Adams, chief equity strategist for Bloomberg Intelligence, said that hasn't happened yet.

"We're not yet seeing a very strong recovery in the broader economic numbers that would suggest the impact of tax reform is more than just temporary," she said. "The market is very impatient."

Adams said the tax cuts may help stocks later on, but investors always want to see better and faster growth, and now they're not sure where that improvement will come from.

MISPRINT: Alphabet slid 5.3 percent to $1,017.05 after the company said ad revenue climbed, but expenses also rose. Google's parent company benefited from strong digital ad sales as well as an accounting change.

Facebook fell 3.8 percent to $159.50 and Microsoft skidded 2.7 percent to $92.77. Another market favorite, Amazon, shed 4.3 percent to $1,452.47.

BONDS: Bond prices were little changed after an early dip. The yield on the 10-year Treasury note stayed at 2.98 percent, matching Monday's close. Earlier it peaked at 3 percent for the first time since January 2014. Low interest rates have played an important role in the economic recovery of the last decade by making it cheap for people and companies to borrow money.

The yield on the 10-year note is a benchmark for many kinds of interest rates including mortgages, and it's been climbing because investors expect greater economic growth and faster inflation.

Since the global financial crisis in 2008-09, a combination of low inflation expectations and a bond-buying program by the Federal Reserve have helped keep bond yields low, but they have climbed this year as inflation has picked up.

RINSE CYCLE: Appliance maker Whirlpool surpassed Wall Street's expectations in the first quarter. The maker of Maytag and KitchenAid products rose 5.5 percent to $158.58.

CURRENCIES: The dollar fell to 108.59 yen from 108.65 yen. The euro rose to $1.2244 from $1.2205.

ENERGY: Benchmark U.S. crude oil shed 1.3 percent to $67.78 a barrel in New York. Brent crude, used to price international oils, fell 0.8 percent to $74.13 per barrel in London.

METALS: Gold rose 0.7 percent to $1,333 an ounce. Silver climbed 0.7 percent to $16.70 an ounce. Copper rose 1 percent to $3.14 a pound.

OVERSEAS: Germany's DAX lost 0.2 percent while the French CAC 40 added 0.1 percent and Britain's FTSE 100 rose 0.4 percent. Japan's benchmark Nikkei 225 rose 0.9 percent, helped by the weaker yen. The Kospi in South Korea lost 0.4 percent and Hong Kong's Hang Seng added 1.4 percent.

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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jay