* Caterpillar hits 5-year low after sales forecast cut
* Nine of 10 S&P sectors lower, industrials fall most
* Investors await Yellen speech at 5 p.m. ET
* Indexes down: Dow 1.5 pct, S&P 1.3 pct, Nasdaq 1.5 pct (Adds details, changes comment, updates prices)
By Tanya Agrawal
Sept 24 (Reuters) - U.S. stocks fell about 1.5 percent in late morning trading on Thursday as Caterpillar’s sales forecast cut dragged down industrials and exacerbated concerns of slowing global economic growth.
Caterpillar fell as much as 7.9 percent to its lowest level since 2010 after the world’s biggest mining and construction equipment maker slashed its 2015 revenue forecast and said it could cut up to 10,000 jobs.
“The (Caterpillar) news is not helping matters, it’s emblematic of a weaker global economy,” said Joseph Quinlan, chief market strategist for U.S. Trust, in New York.
People shouldn’t be surprised but when you get those big headline numbers, that subtracts from confidence obviously.”
Caterpillar was the biggest drag on the Dow and pulled down shares of other industrial companies. The S&P industrials index fell 1.83 percent, the biggest decliner among the 10 major S&P sectors.
Mining equipment maker Joy Global fell 4.5 percent, while Dow component Boeing was down 3.3 percent and General Electric declined 1.8 percent.
Concerns of slowing global economic growth was one of the reason cited by the Federal Reserve when it held off from raising rates last Thursday.
Investors will look for clues regarding the timing of a rate hike when Fed Chair Janet Yellen delivers a speech on inflation at 5 p.m. ET (2100 GMT).
The U.S. equity market has been skittish since last Thursday, with the S&P 500 losing 2.8 percent up to Wednesday’s close.
“The Fed has a credibility problem with the market and that will be a variable that will weigh on sentiment until it’s reconciled,” said Quinlan.
The CBOE Volatility index, known as Wall Street’s “fear gauge”, jumped 11.2 percent to 24.65, above its long-term average of 20.
At 10:49, the Dow Jones industrial average was down 237.37 points, or 1.46 percent, at 16,042.52. Caterpillar shaved off 31 points.
The S&P 500 was down 25.55 points, or 1.32 percent, at 1,913.21 and the Nasdaq composite was down 70.93 points, or 1.49 percent, at 4,681.82.
Nine of the 10 major S&P sectors were lower. Only the utilities sector eked out a gain of 0.25 percent as the U.S. 10-year treasury yield hit 4-week lows.
Quinlan said better-than-expected earnings could act as a circuit breaker to the negative sentiment permeating the market.
However, earnings of S&P 500 companies are expected to decline 3.9 percent in the third quarter from a year ago, Thomson Reuters data shows.
A gauge of U.S. business investment plans fell slightly in August while the number of Americans filing new applications for jobless benefits barely rose last week, signs that global economic headwinds were doing little to impede U.S. growth.
New U.S. single-family home sales rose more quickly than expected in August, pointing to a strengthening recovery in America’s housing market.
Nike and Bed Bath & Beyond are expected to report quarterly results after the market closes.
Declining issues outnumbered advancing ones on the NYSE by 2,312 to 531. On the Nasdaq, 1,929 issues fell and 602 advanced.
The S&P 500 index showed no new 52-week highs and 60 new lows, while the Nasdaq recorded 10 new highs and 140 new lows. (Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D‘Souza)