Dow Jones falls almost 425 points; Caterpillar reports earnings plateau

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Bond yields continue to rise and the 10-year Treasury note reached 3 percent for the first time in more than four years.

The Standard & Poor's 500-stock index and the tech-heavy Nasdaq Composite also showed sharp losses - dropping 1.3 percent and 1.7 percent respectively.

The Dow Jones industrial average slipped more than 2 percent - 550 points - at its low in trading Tuesday as a key US government bond yield hit 3 percent for the first time in more than four years and in reaction to a seemingly innocuous comment from a Caterpillar executive. The Nasdaq Composite was down 121.25 points, or 1.7%, at 7,007.35. The Russell 2000 index declined 8.84 points, or 0.6 percent, to 1,553.28, about half as much as the S&P 500, which tracks large USA companies.

The S&P 500 is down 3.32 points, or 0.1 percent.

Facebook is expected to post adjusted 1Q earnings of $1.36 per share, up 30 percent from $1.04 previous year.

The Russell 2000 is up 26.61 points, or 1.7 percent. Facebook's first-quarter revenue is expected to come in at $11.4 billion - a 43 percent spike from the year-ago quarter. Defense contractor Lockheed Martin sank 5.9 percent to $337.49 and Boeing lost 2.3 percent to $330.91.

BONDS: Bond prices were little changed after an early dip. Low interest rates have played an important role in the economic recovery of the last decade by making it cheap for people and companies to borrow money.

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The yield on the 10-year Treasury, a benchmark for interest rates on many kinds of loans including mortgages, hit 3 percent for the first time since January 2014, reflecting higher expectations for inflation and economic growth. The 10-year yield has been ticking higher because of concerns about inflation and the Federal Reserve raising interest rates. Bloomberg News reported that the companies are close to a deal and the shares rose 2.2 percent to $163.53.

Drugmaker Shire rose 3.3 percent after saying it had received another takeover offer from Japanese rival Takeda. USA consumer confidence rose to 128.7 in April from 127 in March. Meanwhile the Commerce Department said sales of new home jumped in March.

So far, 24 per cent of S&P 500 companies have reported first-quarter results, with 77.1 per cent coming in above the Street consensus, versus the 64 per cent average since 1994.

Among smaller banks, Simmons First National rose 4.1 percent to $30.15 and Banner gained 3.9 percent to $58.01.

West Texas Intermediate crude fell 1.37% to $67.70 a barrel. But the stock gave up those gains and finished with a loss of 6.2 percent at $144.44.

CURRENCIES: The dollar rose to 108.85 yen from 108.65 yen. Brent crude, used to price worldwide oils, lost 15 cents to $73.71 per barrel. South Korea's Kospi lost 0.7 percent at 2,445.90.