Stocks Close Lower As Caterpillar Earnings Drag

Michael Teague |

Markets opened to unexpectedly positive manufacturing numbers coming out of several European countries but stocks were mostly down on Wednesday as construction machinery company Caterpillar’s (CAT) third consecutive dismal earnings report reminded investors of the increasingly slower pace of growth in China.

The flash manufacturing PMI for the European Union crossed into growth territory at 50.1 (below 50 indicates contraction), one basis-point ahead of expectations, on an uptick in French, German, and Spanish manufacturing. Meanwhile, the HSBC China Flash Manufacturing PMI headed in the opposite direction, coming in half of a basis-point shy of the forecasted 48.2.

The Standard & Poor’s 500 was down 0.38 percent to close at 1,685.94 points, while the Dow Jones Industrial Average closed the day at 15,542.24 points, a loss of 0.16 percent, and the NASDAQ was up slightly, 0.01 percent to end at 3,579.60 points.

Caterpillar, the world’s largest purveyor of construction equipment, was a drag on the Dow after the company released its earnings report before the opening bell. Earnings indicated its third consecutive miss on both top and bottom lines. Given the company’s involvement in construction projects around the globe, its performance is seen as an indicator of the state of growth in key regions of the world. Shares were down over 3 percent at one point, as low as $82.64 before shares pared back slightly to end the day down 2.44 percent to $83.44.

Tech stocks gave the Dow support on the upside, with Hewlett-Packard ($HPQ), Intel ($INTC), IBM (IBM) ,  Microsoft (MSFT) , and Cisco Systems (CSCO) all posting gains.

The S&P was held back by shares of tech hardware companies, with semiconductor firms Broadcom Corp. (BRCM) , Advanced Micro Devices (AMD) , and Micron Technology (MU) all dropping on high volume. Caterpillars earnings hit industrial goods stocks hard, as well, with Pulte Group ($PHM), Allegheny Technologies Inc. (ATI) , Lennar Corp (LEN) and Joy Global (JOY) all taking losses of 4 percent or more.

Apple Inc. (AAPL) was up over 5 percent after releasing earnings the previous evening that showed the company beating expectations on earnings and revenue. Company CEO Tim Cook also reasserted earlier promises regarding new products to come later in the year. Investors can expect Facebook's earnings shortly after the closing bell.

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Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 112.52 0.34 0.30 11,708,340
AMD Advanced Micro Devices Inc. 6.83 0.16 2.41 8,055,779
ATI Allegheny Technologies Incorporated 18.03 0.19 1.07 293,087
BDVSY Bidvest Group Ltd ADR (Sponsored) 2008 23.76 0.57 2.46 5,685
BRCM Broadcom Corp. n/a n/a n/a 0
CAT Caterpillar Inc. 88.26 0.79 0.90 1,510,095
CSCO Cisco Systems Inc. 31.65 0.26 0.81 6,667,178
FB Facebook Inc. 128.11 0.02 0.02 5,575,398
HPQ HP Inc. 15.60 0.21 1.36 3,135,226
INTC Intel Corporation 37.74 0.42 1.11 5,454,618
JOY Joy Global Inc. 27.84 0.23 0.83 323,187
LEN Lennar Corporation Class A 42.19 0.00 0.00 332,921
MSFT Microsoft Corporation 57.43 0.03 0.05 6,207,749
MU Micron Technology Inc. 17.86 0.32 1.82 7,574,996
PHM PulteGroup Inc. 19.83 0.02 0.10 645,309

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