Stocks Drift on Earnings

U.S. stocks were little changed Friday after industrial bellwether Caterpillar Inc. (CAT) missed earnings expectations and the heavy equipment maker lowered its outlook, offsetting a strong profit from Google Inc. (GOOG) and the benefit of falling oil prices.

The Dow Jones industrial average closed down 9.36 points, or 0.08 percent, at 12,002.37. The Standard & Poor's 500 Index ended up 1.64 points, or 0.12 percent, at 1,368.60. The Nasdaq Composite Index was up 1.36 points, or 0.06 percent, at 2,342.30.

For the week, the Dow gained 0.35 percent, S&P 500 rose 0.22 percent and the Nasdaq shed 0.64 percent.

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Caterpillar, a Dow component, fell 14.5 percent after cutting its forecasts for 2006 and 2007 on slowing demand for its equipment. The fall was the biggest one-day drop in 19 years for Caterpillar.

A 2.9 percent drop in oil prices on scepticism that OPEC would be able to carry out its production cut helped limit losses for the Nasdaq and S&P 500 stock gauges.

"Oil continues to provide more positive background for inflation and interest rates and therefore equities so long as it is not indicating significant weakness in the economy," said Joe Stocke, a portfolio manager with StoneRidge Investment Partners, adding that "Caterpillar on the downside and with some offset with Coke, for example, on the upside, you have some positive and negatives in terms of the earnings reports."

Solid earnings by blue chips this week, including International Business Machines Corp. (IBM) and Coca-Cola Co. (KO) helped the Dow industrials top 12,000 on Wednesday and finish above that milestone for the first time on Thursday and again Friday.

Google shares rose 7.9 percent to $459.67 after the Web search company said quarterly profit nearly doubled and revenue rose 70 percent. Google was the top positive weight on the Nasdaq 100 and the S&P 500.

Coca-Cola Co. shares rose 4.1 percent to $46.75 one day after posting quarterly profit that beat estimates, helped by strong sales in emerging markets and the recovery of some ailing bottlers.

Diversified manufacturer 3M Co. (MMM), another Dow component, posted better-than-expected quarterly profit, sending its shares up 2.7 percent to $78.47 on the New York Stock Exchange.

3M and Coke shares were the biggest advancers on the Dow, mitigating some of the fallout from Caterpillar.

U.S. crude oil futures ended sharply lower on Friday as the November contract expired after posting a fresh 2006 front-month low price amid skepticism about OPEC's ability to implement an output cut of 1.2 million barrels per day.

November crude expired down $1.68, or 2.87 percent, at $56.82 a barrel.

Caterpillar's outlook, however, reminded investors U.S. economic growth was moderating as the housing market weakens, traders said. Caterpillar fell 14.5 percent or $10.02 to $59.00 — its worse day since the 1987 stock market crash.

In other earnings news, Schering-Plough Corp. (SGP) said on Friday its quarterly profit soared on increased sales of the cholesterol medicines it shares with Merck & Co. Inc. (MRK) and strong demand for its other drugs. Shares in the drugmaker rose 1.6 percent to $22.68 and Merck rose 2.6 percent to $45.64.

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