TORONTO -- The Toronto stock market was modestly higher Tuesday, well off the worst levels of the session amid rising oil and gold prices and a solid earnings report from Canadian grocer Metro Inc. (TSX:MRU).

The S&P/TSX composite index recovered from a 142-point tumble and at mid-afternoon was up 27.55 points at 14,825.38.

Metro's quarterly net income was up 13.4 per cent from a year ago to $112.5 million. Adjusted earnings were $1.35 per share, four cents above estimates, while sales were up 5.2 per cent to $2.84 billion.

Metro also announced a three-for-one stock split and a dividend hike. Metro shares advanced $3.52 or 3.62 per cent to $100.78 after hitting an all time high of $104.03.

The Canadian dollar rose 0.43 of a cent to 80.66 cents US.

The selling pressure was particularly fierce in New York amid disappointments from corporate heavyweights including Caterpillar and Microsoft.

The Dow Jones industrials plunged 237.32 points to 17,441.38, the Nasdaq lost 62.91 points to 4,708.85 and the S&P 500 index fell 19.72 points to 2,037.37.

Traders also took in a disappointing reading on U.S. durable goods orders for December. They fell 3.4 per cent, led by a 55.5 per cent plunge in the volatile commercial aircraft category.

But there was also weakness in a number of areas, with demand for machinery, computer and primary metals all down.

Caterpillar Inc. posted earnings, adjusted for restructuring costs, of $1.35 per share, widely missing expectations of $1.55 a share. Revenue of $14.24 billion beat forecasts for $14.18 billion but its shares dropped six per cent as the heavy machinery manufacturer delivered a disappointing outlook as the commodities super cycle ground to a halt.

Its shares fell 7.55 per cent to US$79.54, leaving some analysts puzzled why markets would be surprised that Caterpillar would have a soft outlook.

"It's not a surprise. I mean the majority of Caterpillar's growth over the last multiple years has come from international sources -- why would we be surprised at this?" asked Brian Belski, Chief Investment Strategist at BMO Capital Markets.

"My theory is there is a general reluctance for investors to let go of the international growth story."

And Microsoft shares fell 8.5 per cent to $43.02 despite meeting profit expectations and beating revenue forecasts for the latest quarter. JPMorgan downgraded the company to neutral from overweight and reduced its price target to US$47 from $53. A group of analysts at the brokerage said the downgrade reflected Microsoft's spending projections, saying the company will not exercise as much spending discipline as anticipated.

Traders also looked to the Federal Reserve and its interest rate announcement on Wednesday.

The base metals sector led declines, down 1.85 per cent as a strengthening greenback and demand concerns from China pushed copper down eight cents to a fresh 5 1/2 year low of US$2.46 a pound.

Industrials fell 0.5 with Canadian National Railway (TSX:CNR) down 70 cents to $84.74 ahead of earnings coming out after the close.

TSX losses were minimized by a 2.9 per cent gain in the gold sector as bullion gained $12.30 to US$1,291.70 an ounce.

Oil prices were 78 cents higher to US$45.93 a barrel and the energy sector was up 0.6 per cent.