Dow hugs the flat line as Caterpillar’s stock declines

U.S. stocks struggled for direction amid another busy day for corporate earnings, which featured mixed results from industrial heavyweights Caterpillar and Boeing.

The S&P 500 (^GSPC) was little changed as of 12:33 p.m. ET, slipping 0.04%, or 1.15 points. The Dow (^DJI) fell 0.04%, or 8.12 points, while the Nasdaq (^IXIC) rose 0.02%, or 1.68 points.

On Tuesday, both the S&P 500 and Nasdaq posted record closing highs, while the Dow came within 1% of an all-time record close, on the heels of stronger-than-expected results from consumer and tech names including Coca-Cola (KO) and Twitter (TWTR).

Wednesday morning, quarterly results from Boeing and Caterpillar took centerstage, with a more than 3% decline in the latter’s stock weighing on the Dow. After the closing bell, tech names including Microsoft (MSFT), Facebook (FB), PayPay (PYPL) and Tesla (TSLA) report results.

Industrial earnings
Boeing (BA) Wednesday morning missed consensus estimates for quarterly earnings and said it would be placing a halt on issuing new guidance. Core earnings per share totaled $3.16 for the quarter, missing consensus estimates by 9 cents, while revenues of $22.9 billion were in-line with expectations. This comes in the wake of two deadly crashes involving the company’s 737 Max-8 aircraft, which spurred individual airlines and governments across the globe to ground the planes as ongoing investigations into the causes of the crashes take place.

The Chicago, Illinois–based company said Wednesday that its previously issued 2019 guidance “does not reflect 737 Max impacts.” In January, Boeing issued guidance stating that it anticipated revenues of between $109.5 to $111.5 billion for the full-year 2019, along with core earnings per share of between $19.90 and $20.10 per share.

Shares wavered in early trading before pushing more than 1% higher as investors considered solid results in the company’s closely watched defense, space and security segment, which rose 2% in the first quarter. Boeing shares were up 16% for the year-to-date through Tuesday.

Meanwhile, peer industrial company Caterpillar (CAT) raised its 2019 earnings outlook on Wednesday to between $12.06 to $13.06 in account of a first-quarter tax benefit. The company previously saw earnings of between $11.75 and $12.75 per share for the full fiscal year.

Caterpillar’s adjusted earnings per share in the first quarter topped consensus estimates, coming in at $2.94, versus $2.86 expected. Quarterly revenue of $13.5 billion exceeded expectations of $13.4 billion, and rose 5% over last year. Caterpillar said this increase was “primarily due to higher sales volume driven by improved demand for both equipment and services,” led by an 18% revenue increase in its resource industries segment, which includes its mining business.

Operating profit of $2.207 billion grew 4.7% from last year, however, Caterpillar noted that gains were capped due to cost pressures in labor, freight expenses and “material costs, including tariffs.”

Shares of Caterpillar wavered in early trading before falling 3.4% to $137.20 as of 9:42 a.m. ET.

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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