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Markets are weighed down by disappointing earnings

Christina Rexrode, AP Business Writer

Trader Michael Zicchinolfi, center, works on the floor of the New York Stock Exchange Monday, Oct. 22, 2012. A weak forecast from heavy equipment maker Caterpillar and other poor earnings results weighed on the U.S. stock market in early trading. (AP Photo/Richard Drew)

NEW YORK (AP) -- The stock market turned lower Monday afternoon as investors absorbed mixed earnings reports and waited for an important economic report due at the end of the week.

The major indexes waffled between small gains and losses in the morning, then sank by mid-afternoon.

The Dow was down 83 points to 13,261 as of 2 p.m. The Standard & Poor's 500 index was down nine to 1,424 and the Nasdaq composite index fell five to 3,001.

Company earnings signaled that the economy isn't at full bore.

Hasbro, the toymaker behind brands like My Little Pony and Transformers, said that sales for boys and preschool were less than it had hoped. The stock slipped 32 cents to $38.73.

Clothing maker VF Corp., whose brands include The North Face and Wrangler, fell after its revenue fell short of analysts' estimates. The stock lost $8.49, hitting $158.28.

Caterpillar, the world's largest construction and mining equipment company, cut its profit and revenue predictions for the year, saying the global economy is weaker than it previously thought. But profit and revenue both increased, and the stock rose 30 cents to $84.16.

SunTrust Banks slipped after announcing its quarterly results. Earnings were sharply higher, but that was largely because the bank sold shares it owned in Coca-Cola. The Atlanta-based bank wrestled with higher expenses as well as low interest rates, which can crimp the profit banks make from lending out money. The stock lost 89 cents to $27.74.

The markets just got through the first peak week of third-quarter earnings reports. On Friday, disappointing results from Microsoft, General Electric and McDonald's surprised traders and pushed U.S. stocks lower.

While most companies have pulled in better-than-expected earnings, investors now are more interested in how they're doing on revenue. Revenue can give a more accurate picture of how a company is performing, because earnings can vary widely on items like accounting charges and cost-cutting.

David Katz, principal and senior portfolio strategist at WeiserMazars Wealth Advisors in New York, described companies' third-quarter revenue results as "fair" and said the U.S. economy is "slow and steady."

"It is at a snail's pace," he said. "But it's certainly better than what we had."

Developments that could move the market are coming soon. Yahoo, a proxy for how the tech industry is doing, will report earnings after the market closes. Bellwether companies like Apple and Procter & Gamble report later this week. The government releases its report on third-quarter economic growth on Friday. And two weeks from now, the U.S. holds its presidential election.

Of the roughly 100 companies in the S&P 500 that had reported third-quarter results as of Friday, 70 percent have beat analysts' estimates for earnings, according to John Butters, senior earnings analyst at FactSet. But only 42 percent have beat estimates for revenue. That's the lowest since the first quarter of 2009, when the stock market hit its Great Recession lows.

Ancestry.com, the genealogy website, jumped after announcing it will be bought by European private equity firms. The stock popped $2.28 to $31.46. The buyers had offered $32 per share.

In other trading, the yield on the 10-year Treasury note rose to 1.79 percent from 1.76 percent late Friday. The euro was worth $1.30, little changed from Friday, and energy prices fell slightly. Crude oil fell $1.11 to $89.33 a barrel in New York.