Market sinks on growth fears

- Stocks tumbled on Friday after heavy equipment maker Caterpillar Inc cut its profit forecast and warned the housing downturn was spreading to other parts of the economy.

With investors mindful of the 20th anniversary of Black Monday, major indexes fell more than 1 percent as Caterpillar said key industrial sectors it serves were in recession.

The bleak comments from Caterpillar, which fell 3 percent, helped drag down shares of other big manufacturers, including 3M Co., which was off 7 percent.

A drop in crude oil prices sent shares of energy companies down, contributing to investors' shift from stocks to the relative safety of U.S. government debt.

"The (stock) market is disturbed by a weak economy because of some of the reports out from companies such as Caterpillar or Wachovia," said Charles Lieberman, chief investment officer of Advisors Capital Management, LLC in Paramus, New Jersey.

Wachovia Corp, the fourth-largest U.S. bank, posted a 10 percent drop in quarterly profit, hurt by $1.3 billion of write-downs at its investment banking unit as credit markets tightened.

"Wachovia is a conservative bank, yet they reported earnings down 10 percent," Lieberman said.

The Dow Jones industrial average was down 201.92 points, or 1.45 percent, at 13,687.04. The Standard & Poor's 500 Index

was down 19.86 points, or 1.29 percent, at 1,520.22. The Nasdaq Composite Index was down 39.83 points, or 1.42 percent, at 2,759.48.

The market's decline coincided with the 20th anniversary of "Black Monday," when the Dow industrials fell 23 percent on October 19, 1987.

The dollar fell to an all-time low against the euro and there were worries the credit squeeze would drag on financial services companies.

Caterpillar said several industries it serves were in recession and machinery sales to nonresidential builders were declining as fast as sales to residential builders, which it described as in "severe recession."

Exxon Mobil Corp shares dropped 1.3 percent to $93.84 as U.S. crude shed 48 cents to $88.99 after rising to a record $90.07 a barrel overnight.

Caterpillar fell 3.5 percent to $74.97 while 3M dropped 7 percent to $88.26.