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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Name Price Change % Volume
AAPL Apple Inc. 116.60 -0.46 -0.39 23,192,665
AMD Advanced Micro Devices Inc. 6.52 -0.44 -6.32 64,243,549
ATI Allegheny Technologies Incorporated 17.77 -0.02 -0.11 1,388,759
BDVSY Bidvest Group Ltd ADR (Sponsored) 2008 24.37 0.11 0.43 3,626
BRCM Broadcom Corp. n/a n/a n/a 0
CAT Caterpillar Inc. 86.33 -0.30 -0.35 3,592,524
CSCO Cisco Systems Inc. 30.15 -0.01 -0.03 15,140,452
FB Facebook Inc. 132.07 2.07 1.59 19,088,794
HPQ HP Inc. 13.80 -0.30 -2.13 14,610,055
INTC Intel Corporation 35.15 -0.28 -0.79 20,813,248
JOY Joy Global Inc. 27.89 0.02 0.07 718,063
LEN Lennar Corporation Class A 41.22 -0.18 -0.43 1,524,634
MSFT Microsoft Corporation 59.66 2.41 4.21 80,032,206
MU Micron Technology Inc. 16.94 -0.27 -1.54 18,710,303
PHM PulteGroup Inc. 19.06 -0.14 -0.73 5,865,101


Emerging Growth

MGX Minerals Inc.

MGX Minerals is a diversified Canadian mining company listed on the Canadian Securities Exchange. MGX is engaged in the acquisition and development of industrial mineral deposits in western Canada that…

Private Markets


Cloudera offers enterprises a new data platform built on the Apache Hadoop open-source software package. Hadoop is a data-management platform that can consolidate data in a single repository for comprehensive…


Wealthfront is an automated investment service that serves as an alternative to traditional financial advisory services. The company manages a diversified, continually rebalanced portfolio of index funds on their clients’…