By Julia Edwards
NEW YORK (Reuters) - U.S. stocks fell on Wednesday as shares of heavy-equipment maker Caterpillar and semiconductor companies tumbled after they reported earnings, ending the S&P 500's four-session streak of record high finishes.
Caterpillar was one of the biggest decliners on the S&P, slumping 6.2 percent to $83.62 after the manufacturer cut its full-year outlook for a third time and its profit missed expectations. That sent shares tumbling by the most in a day since September 2011.
"There's not a lot of room for error as earnings are growing at such a slow pace, particularly for a globally focused company like Caterpillar, which has been a proxy for global GDP in global markets," said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank. "It's no secret the rest of the world has suffered, so therefore a company like Caterpillar is going to suffer."
On the upside, Boeing surged 5.3 percent to $129.02 after airplane maker reported a rise in adjusted profit and raising its full-year forecast.
After the market closed, both AT&T (NYS:T) and TripAdvisor (TRIP.O) reported revenue that was slightly below Wall Street's estimates. AT&T's revenue grew from the previous quarter to $32.16 billion compared with Wall Street estimates for $32.19 billion, according to Thomson Reuters I/B/E/S data.
TripAdvisor's revenue rose 20 percent to $255.1 million in the third quarter, below analysts' expectations of $255.9 million. TripAdvisor shares in extended-hours trading were up 5 percent to $79.25 after closing down 0.3 percent at $75.21 in the regular session. AT&T shares were flat.
About one-third of S&P 500 companies have reported thus far, with 66.3 percent topping profit expectations, a rate that is slightly higher than the historical average. Roughly 54 percent have beaten on revenue, below the 61 percent long-term average. Investors worry that much of the growth in earnings has not been generated by revenue.
"Finally the markets are focused on earnings after having been focused on many other things," Davidson, who called third quarter results released so far "tepid."
The semiconductor sector (.SOX) dropped 3.4 percent a day after Broadcom (BRCM), Altera (ALTR) and RF Micro Devices (RFMD) joined Intel (INTC) and Texas Instruments (TXN.O) in lowering their forecasts.
Broadcom shares fell 2.9 percent to $26.36, Altera lost 13.5 percent to $32.30 and RF Micro lost 8.6 percent to $5.63.
The Dow Jones industrial average (^DJI) was down 54.40 points, or 0.35 percent, at 15,413.26. The Standard & Poor's 500 Index (^GSPC) was down 8.31 points, or 0.47 percent, at 1,746.36. The Nasdaq Composite Index (^IXIC) was down 22.49 points, or 0.57 percent, at 3,907.07.
The S&P 500 closed at an all-time high on Tuesday, its fourth-straight record finish. The index is up 22 percent for the year up to Tuesday, not far from the 23.5 percent advance in 2009.
On Wednesday, 53 percent of total shares traded were declining.
Global equity markets weakened as China's primary short-term money rates rose on concerns the People's Bank of China may tighten its cash supply to counter inflation risks, which could hurt growth in the world's second-largest economy.
Also weighing on sentiment, the European Central Bank said it would put major euro zone banks through rigorous tests next year to build confidence in the sector. Some analysts said that if the review reveals unexpected problems, investor confidence could be undermined.
Netflix (NFLX) shares were up 2.4 percent to $330.24 following a large selloff on Tuesday when billionaire investor Carl Icahn cut his stake in the company.
(Editing by Bernadette Baum, Nick Zieminski and Kenneth Barry)