While you were sleeping: Caterpillar, 3M disappoint

Disappointing earnings from companies including Caterpillar and 3M weighed on Wall Street, while the latest reports on US jobless claims and leading indicators firmed expectations the US Federal Reserve will lift interest rates soon.

Also weighing on markets was the extended slide in commodities including oil, gold, and copper.

"There is just a negative mood in commodities and for oil there is the worry that the global economy is going to affect demand," Phil Flynn, analyst at Price Futures Group in Chicago, told Reuters.

In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.5%, the Standard & Poor's 500 Index declined 0.4%, while the Nasdaq Composite Index slipped 0.2%.

Slides in shares of Caterpillar and those of 3M, last trading 3.7% and 3.4% weaker respectively, propelled the Dow lower. Bucking the trend were shares of Cisco, last trading 2.3% higher.

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

Indeed, shares of Dow Chemical sank, last 5.1% lower, after chief executive Andrew Liveris warned that "China remains a mixed bag."

"A very solid second quarter for us is not necessarily a harbinger of the third quarter," Mr Liveris said on a post-earnings call, Reuters reported.

On the flipside, shares of General Motors climbed, last 4.2% stronger, after the company reported better-than-expected earnings and margins.

"The first two quarters of the year were strong as we fully capitalised on a robust North American industry and maintained our strength in China, despite the challenging conditions in that market," GM chief executive Mary Barra said in a statement.

"We said our goal was to improve our earnings and margins this year, and we are on plan," Ms Barra noted. "Consistent with that, we believe our results in the second half of the year will be even better than the first half, and we're confident we will meet our 2016 targets."

Under Armour also exceeded expectations, pushing its shares 7.2% higher.

The latest US economic data pointed to strength. Initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 255,000 for the week ended July 18, the lowest level since 1973. Separately, the Conference Board's leading economic index gained 0.6% in June, following a 0.8% increase in May.

Economists surveyed by Bloomberg put odds on a September Fed rate increase at 50%, exactly where they were in June.

The Federal Open Market Committee starts its next two-day meeting on July 28.

In Europe, the Stoxx 600 Index finished the session with a 0.5% drop from the previous close. Germany's DAX dipped 0.1%, and the UK's FTSE 100 Index slipped 0.2%. France's CAC 40 added 0.1%.

Greek financial markets remained closed, though they appear poised to open next week. On Thursday, the Greek parliament approved a second set of measures as part of its bailout accord.

(BusinessDesk)