Caterpillar and Nvidia deliver one-two punch to US Stocks

Caterpillar and Nvidia news drag stocks down in what could be a pivotal week for stocks.  As we approach the midpoint of fourth quarter earnings results, we have seen for the most part upbeat signals from the financials, airlines, and consumer discretionary, however that could change once we see key earning results from the tech sector this week.

Before the bell, Caterpillar delivered poor results, the worst profit miss in almost a decade as higher costs and a China slowdown continue to weigh on the outlook. The soft outlook for the industrial giant, combined with the negative sentiment we heard from various leaders last week in Davos provide a backdrop for softer results from other bellwethers this week.

Nvidia Inc, the largest maker of chips for computer graphic cards decided to cut their guidance, two weeks before their results were due.  Nvidia appears to be trying to get out ahead of big earning results from their peers this week, that might show the same story that China is deteriorating worse than expected.  Today’s cut is a bad sign for semiconductor stocks as the cut was also attributed to falling datacenter revenue, a part of the business that was expected to be healthy due companies needing technological upgrades and CAPEX money that allotted for the creation of new datacenters.

The Dow Industrial Average fell 1.4% on the poor results from Caterpillar and the Nasdaq dropped 1.6% on Nvidia’s warning.  The Japanese yen firmed up today on the risk aversion flows.  Tech giant, Apple reports tomorrow, Boeing and Microsoft report on Wednesday, and Amazon reports on Thursday.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya