Diversified U.S. manufacturer 3M sounded a warning Tuesday, telling Wall Street that Europe's brewing debt crisis and weakening consumer demand were taking a toll on profit.
The maker of products ranging from Post-It notes to films used in flat-panel televisions was not alone in calling out Europe, with Illinois Tool Works and Paccar also citing worsening demand from the continent, where investors worry that sovereign debt default could rattle the banking system.
3M Tuesday became the first blue-chip U.S. manufacturer to miss third-quarter earnings forecasts.
3M is typically quicker to feel the effects of a downturn than General Electric or United Technologies, whose bigger-ticket items are ordered longer before delivery and which generate a lot of revenue maintaining their jet engines, electric turbines and elevators.
"The quarter turned out to be a very different one than what we expected," 3M Chief Executive George Buckley told analysts on a conference call. "Cause No. 1 was worries about European sovereign debt and the European economy. Cause No. 2 was the rapid contraction of the electronics end markets."
In particular, the St. Paul, Minnesota-based company said weak consumer electronics sales hurt its results.
Its shares fell 5 percent in morning trading, making it the biggest drag on the Dow Jones Industrial Average.
Paccar, which makes Peterbilt, Kenworth and DAF heavy trucks, also raised a red flag on Europe.
"Recent euro zone economic uncertainties have resulted in lower industry truck orders," Paccar CEO Mark Pigott said in a statement.
Even with these worries, top executives at U.S. companies said they believe the nation's economy is not headed back into recession.
United Parcel Service CEO Scott Davis told investors Tuesday he believes the U.S. economy has stabilized, while 3M Chief Financial Officer David Meline said he did not expect a double-dip recession .
With a little more than two months to go in 2011, some industrials took an opportunity Tuesday to revise their forecasts for the rest of the year.
Diesel engine maker Cummins cited global economic uncertainty, including efforts by the governments of India and China to fight inflation, in pulling back its full-year revenue and profit margin forecasts.
The Columbus, Indiana-based company said it now expects full-year sales of $17.5 billion to $18 billion.
ITW shares were down 4 percent on Tuesday and Paccar eased less than 1 percent, with the Standard & Poor's capital goods industry index falling 2 percent.
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