By Dan Strumpf 

U.S. stocks fell but pared their steepest declines, as worries over slowing global growth lingered.

Stocks remain stuck in low gear following a late-August selloff, and last week's decision by the Federal Reserve to keep rates near zero affirmed investor fears that growth had hit a rough patch.

A selloff in shares of Caterpillar Inc. weighed on broad indexes after the industrial bellwether issued a deep cut to its revenue forecast for the year.

"We're very much counseling caution and patience right here," said Willie Delwiche, investment strategist at Baird Wealth Management Group in Milwaukee. "The uncertainty from the Fed and the lack of confidence in the U.S. economy speaks volumes."

U.S. shares pulled back from their deepest intraday declines. The Dow Jones Industrial Average fell 76 points, or 0.5%, to 16204 in afternoon trading, bouncing back from a loss of as much as 264 points earlier in the session.

Caterpillar shares fell 6.4%, notching the biggest loss in the Dow. Industrial companies in the S&P 500 fell 0.7%.

Investors bid up assets perceived as safe, including U.S. government debt. Rising prices sent the yield on the benchmark 10-year note down to 2.125% from 2.144% on Wednesday, after earlier falling to its lowest level in nearly a month earlier Thursday.

The S&P 500 lost 0.3%, while the Nasdaq Composite shed 0.4%.

But other sectors were higher. Energy shares in the S&P 500 added 0.5% as oil prices reversed earlier losses.

U.S. stocks have seen wide swings in recent sessions since a late-August slide sent major indexes into "correction" territory, marked by a decline of 10% or more from a recent peak. Although near-zero interest rates have helped juice the six-year-old bull market in stocks, the Fed's announcement last week to keep rates unchanged left many investors unnerved. The central bank voiced concerns about a growth slowdown overseas.

Traders said the selloff in Caterpillar shares was a major focus for many investors on Thursday. The company's business lines, from construction to energy to commodities, are closely linked to the global economy, particularly demand from China.

"They're such a large company--how do you miss that badly?" said Justin Wiggs, managing director of equity trading at Stifel Nicolaus. "And how does everyone else dodge that?"

Other haven assets rallied. Gold futures rose 2% to $1,153.80 a troy ounce, notching its biggest two-day percentage gain since Aug. 21.

Elsewhere in commodities, U.S. crude-oil futures rose 1% to $44.91 a barrel.

Investors remained cautious ahead of a speech by Federal Reserve Chairwoman Janet Yellen later in the day at the University of Massachusetts-Amherst, which could offer clues on the timing of a rise in rates.

Despite worries over global growth, many investors note that, by many measures, the U.S. economy remains on track. Job growth has expanded and the unemployment rate is creeping down toward 5%.

Inflation, however, remains subdued and corporate profit growth has slowed drastically. Earnings among S&P 500 companies contracted in the second quarter for the first time since 2012, falling 0.5%. Analysts expect profits to fall another 4.5% in the third quarter, according to FactSet.

In economic news, initial jobless claims rose by 3,000 to 267,000 in the week ended Sept. 19, the Labor Department said Thursday, a level consistent with an improving labor market. Economists had expected 275,000 new claims.

Orders for big-ticket items fell in August, a sign that the strong dollar and economic weakness overseas may be crimping demand for American goods. New orders for durable goods fell 2% in August from a month earlier, the Commerce Department said Thursday. Economists had expected orders to fall 2.5%.

"Investors' confidence is fragile. Markets are uncertain post the Fed decision," said James Barty, an equity strategist at Bank of America Merrill Lynch.

Shares in Japan fell sharply as trading resumed after a three-day holiday. The Nikkei Stock Average closed down 2.8%, catching up with declines in global markets over recent sessions. China's Shanghai Composite Index closed 0.9% higher.

Write to Dan Strumpf at daniel.strumpf@wsj.com

 

(END) Dow Jones Newswires

September 24, 2015 16:12 ET (20:12 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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