So far this earnings season, we saw just how powerfully quarterly reports can move the market in both directions. Early in the season, better-than-expected results from financial companies spurred a surprise rally for stocks. But then last week, a host of tech-related disappointments sent the market sprawling. As earnings season continues, what will this week's announcements do to the Dow Jones Industrials (INDEX: ^DJI ) and the stock market as a whole?
Although this week doesn't have as heavy a schedule of Dow components reporting earnings as last week, there are still quite a few companies weighing in. Let's take a look at each of them and what impact they could have on the overall market.
Caterpillar (NYSE: CAT )
The week starts off bright and early, as Caterpillar reports before the market opens on Monday. Analysts expect a strong showing, with earnings per share seen rising 30% from last year's third quarter.
After Caterpillar's unusual guidance in reducing long-range 2015 earnings estimates last month, you shouldn't get too hung up on whatever past numbers the equipment maker reports. Rather, what will move the markets is in forward projections. With the company already having predicted that 2013 won't show much economic improvement over this year, any sign that Caterpillar is following through with its commitment to defer capital spending if it sees a coming recession could send the market reeling.
The following morning, chemical giant DuPont is set to report. The news here isn't nearly as good as with Caterpillar, as analysts see DuPont's earnings per share down by nearly a third from last year.
DuPont fell earlier this month, when Mosaic reported weak earnings, as some question whether the trend toward a strong agricultural sector may reverse itself. One analyst already chopped its estimates for the company, citing cyclical weakness and fundamental economic slowness, but investors should look closely at how DuPont is faring next to its competitors. Even if the industry turns downward, the strongest players may do better, and DuPont is certainly in the running for that status.
3M (NYSE: MMM )
Completing the trio of industrials, 3M also reports Tuesday morning. Estimates call for about a 9% rise in earnings per share from last year's levels.
Backward-looking results may be interesting, but far more important will be comments about the company's buyout of Ceradyne. Despite having one of the top brands among Dow stocks, 3M couldn't complete a planned acquisition of Avery Dennison's consumer products division because of anticompetitive concerns, but Ceradyne could help it boost its long history of innovation.
Boeing (NYSE: BA )
Wednesday morning, aerospace giant Boeing reports. Earnings per share are seen jumping more than 35%.
Boeing seems to have a perfect long-term picture, with huge backlogs of orders as far as the eye can see. The problem is delivering on those orders, which has plagued the company in the past. If it can finally start moving forward more forcefully with construction and delivery, then Boeing could soar to new heights.
AT&T (NYSE: T )
Also before the market opens on Wednesday, AT&T will make its earnings announcement. Analysts expect a penny's drop on earnings per share from last year's figures.
In many ways, the third quarter for AT&T will be a moot point. With only a few days of iPhone 5 sales in the quarter, investors will be looking more for guidance on how the current quarter is going. With concerns about iPhone supply constraints, the entire market could move on what AT&T's actual experience tells investors.
Look for big moves
Earnings move stocks, but when those stocks are among the biggest blue chips in the world, they can move markets as well. Be sure to watch for these companies when they report this week.
If there's one stock that could give you insight into the entire global economy, it's Caterpillar. Its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. But even with all that going for it, is Caterpillar a buy? We reveal all in our premium research report on the stock. Just click here to access it now.