While you were sleeping: Wall Street slips amid doubts

BUSINESSDESK: Wall Street dropped as Caterpillar slashed its earnings forecast and a Federal Reserve official said he believed the central bank's plan for more asset purchases will do little to bolster the pace of economic expansion.

"I believe that increasing monetary policy accommodation is neither appropriate nor likely to be effective in the current environment," Philadelphia Fed president Charles Plosser said today in a speech at the bank. He doesn't hold a voting position.

He expects the US economy to grow by about 3% per year in 2013 and 2014.

As a clear sign of the troubled environment, Caterpillar became the latest company to cut its earnings outlook, downgrading 2015 profit forecasts, which sent its shares more than 3% lower.

"We've seen a slowing in economic growth that was more than we expected," chairman and chief executive officer Doug Oberhelman said yesterday, according to Bloomberg News. "We think '13 could look like 2012 in terms of worldwide economic growth."

In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.18%, the Standard & Poor's 500 shed 0.34%, while the Nasdaq Composite Index dropped 0.41%. Falling Apple shares paced Nasdaq down.

The Dow needs to rise about 4% to reach its peak of 14,164.53, Bloomberg said, while the S&P 500 needs an increase of about 7%  to reach its record of 1565.15.

The S&P 500 is up more than 3% this month and about 7% this quarter.

The latest US data had earlier provided some optimism as consumer confidence and home prices were better than expected.

The Conference Board's sentiment index rose to 70.3 in September, the highest level in seven months, from 61.3 in August.

Meanwhile, the S&P/Case-Shiller index of property values in 20 cities gained 1.2% from July 2011, the largest 12-month advance since August 2010.

"Housing is out of the woods and it should be making a contribution to the overall economy going forward," David Blitzer, chairman of the index committee at S&P, told Reuters.

In Europe, the Stoxx 600 Index finished the session with a 0.4% gain from the previous close.

Spain and Italy drew less demand than previously for their debt auctions today.

Spain sold three-month bills at a yield of 1.203%, up from 0.946% at the previous auction on August 28, according to Bloomberg. Demand dropped to 3.29 times the amount allotted, from 3.35 times in August. It also sold six-month debt at 2.213%, versus 2.026%.

Investors await Fiday's Spanish budget for the next read on the nation's finances.