Weakness in Google and Dow component Caterpillar was seen as the main catalyst for today’s drubbing. We talked about Google in our report from Thursday – the company had just its second earnings miss since it has gone public.

Caterpillar announced a second quarter profit decline of more than 20% due to a soft construction market. As a sensitive indicator of the heavy equipment sector, this shortfall was perceived as a negative for the economy. Some analysts think it is merely a blip however, citing continued strong construction demand from India and China, in particular. Many Dow components are doing very well given their international business orientation. Indeed, Caterpillar’s Chairman and CEO confirmed this today by saying that “We're pleased with second-quarter sales and revenues which demonstrated the strength of our global reach'.

Renewed suprime fears and persistent weakness in the home builders sector (KM Home said it does not believe a bottom in the housing market will be found until the end of next year) also contributed to a general malaise today. Then , there was some profit taking after a vigorous run.

Key economic data for the week starting July 23, 2007. Numbers shown are consensus estimates (market anticipates this value) and prior value.

Wednesday:
	10:00 Existing Home Sales June: 5.87M / 5.99M 14:00 Beige Book

Thursday:
	8:30 Durable Goods Orders June: 1.9% / -2.4% 10:00 New Home Sales June: 900K / 915K

Friday:
	8:30 Real GDP second quarter: 3.2% / 0.7% GDP Price Index: 3.4% / 4.2% Core PCE: 1.5% / 2.4% 10:00 Michigan Sentiment index July: 91.5 / 92.4

© HGH Associated Press

News Archive (from 7/1/2007 until 9/30/2007)