Morning Watch, Oct. 19

Caterpillar () is the worst performer in the Dow early in the trading session. Shares fell after the maker of earth moving equipment posted quarterly profits of $1.42 a share, which was two cents less than consensus analyst estimates. 3M () and Honeywell () are also dragging down the industrial average, as investors sold shares following their respective earnings releases.

SanDisk () is weighing on the tech sector. Shares fell more than $5.00 early in the day, to a low of $45.12, after the chipmaker reported 36 cents a share for the quarter, compared to 51 cents a year earlier. SanDisk also said that it expects prices to fall moderately in the fourth quarter.

Banks are under pressure for a fifth time this week after Wachovia () reported a 10% drop in third quarter profits and said it recorded $1.3 billion in losses and write-downs. Google () shares are higher, however, after the company said its profits rose 46% in the third quarter and a number of analysts raised their price targets on the stock.    

With no economic data on tap today, Fed Chairman Ben Bernanke is expected to get some attention. The head of the US central bank speaks today in a panel discussion at a bank conference in St. Louis today. Bonds are higher ahead of the speech. The benchmark ten-year Treasury note is up 7/32^nd and its yield is now 4.47%.

Crude is also getting some attention. Prices rose to record highs above $90.00 a barrel late yesterday amid supply fears and ongoing weakness in the US dollar. The buck hit another new low against the euro yesterday and is down five days straight against the Japanese yen.  

Overall, the day’s news doesn’t offer much fodder for the stock market bulls. In addition, today is the 20^th anniversary of “Black Monday”, which resulted in a one-day 23% loss in the Dow Jones Industrial Average. S

Frederic Ruffy
Senior Writer
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