By Leah Schnurr
NEW YORK (Reuters) - Stocks slipped on Thursday, with the Dow and the S&P giving up gains by midday in volatile trading as investors' worries about the economy overshadowed an earlier bounce driven by bargain hunters.
Caterpillar, a maker of bulldozers and excavators, weighed on the Dow, in the wake of giving a sales warning and reporting lower quarterly profit earlier this week. Late Wednesday, some brokerages cut their price targets on the stock.
A disappointing sales outlook from online retailer Amazon.com Inc dipped 3.26 points, or 0.04 percent, to 8,515.95. The Standard & Poor's 500 Index was off 6.20 points, or 0.69 percent, to 890.58. The Nasdaq Composite Index fell 27.29 points, or 1.69 percent, to 1,588.46.
Earlier in the day, the Dow had risen as much as 3.3 percent, or 276.78 points, to a session high at 8,795.99 in a rally driven by bargain hunters.
Coca-Cola Co was the heaviest weight on the Dow after bottler Coca-Cola Enterprises Inc cut its 2008 profit forecast. Coke, which owns about 40 percent of the bottler, lost 5.1 percent to $43.08 on the New York Stock Exchange.
Amazon.com Inc fell 5.5 percent to $47.24 after it said sales in the holiday quarter would fall short of Wall Street's expectations.
The energy sector, buoyed by rising oil prices, helped limit the declines in both the Dow and the S&P 500. Exxon Mobil was up 4.4 percent at $67.41. Rival Chevron rose 3.3 percent to $63.76.
An S&P index of energy shares advanced 1.8 percent.
U.S. front-month crude futures added $1.495 to $68.22 a barrel at midday.
On the earnings front, however, there were some bright spots.
Dow Chemical jumped 8.4 percent to $23.96 after the largest U.S. chemical maker, posted lower third-quarter profit but still beat expectations on strong results from its agricultural business. But Dow warned that the global economy was likely to struggle through a recession for most of 2009.
Health-care stocks, a sector that usually does well in a downturn, also contributed to the turnaround, highlighting the defensive nature of Thursday's advance. Bristol-Myers Squibb Co and Eli Lilly and Co posted better-than-expected third-quarter profits. Bristol-Myers was up 2.6 percent at $17.99, while Eli Lilly's stock added 0.7 percent to $32.32.
Amgen Inc helped curb the Nasdaq's decline after the world's largest biotechnology company reported a better-than-expected profit on Wednesday. Amgen jumped 11.8 percent to $55.57.
(Editing by Jan Paschal)
