A Cautious Caterpillar Leads the Dow

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is roughly unchanged in intraday trading, as some positive economic releases are being tempered by Caterpillar's weak outlook, which does not bode well for the U.S. economy. As of 1:20 p.m. EST, the Dow is down 19 points, or 0.14%, to 13,877. The S&P 500 (SNPINDEX: ^GSPC  ) is down 0.23%.

There were two U.S. economic releases this morning.





Durable-goods orders




Pending home-sales index




Source: MarketWatch U.S. Economic Calendar.

This morning the National Association of Realtors reported that its pending home-sales index fell 4.3% in December. This is positive for home sale prices, as it reflects lower numbers of houses up for sale. With constrained supply and constant and improving demand for houses, prices should gravitate upward.

Meanwhile, the Department of Commerce reported that durable-goods orders rose 4.6% in December to $230.7 billion. That's higher than November's 0.7% growth and far above analyst expectations of 2.3%. If you exclude transportation equipment, which was up almost 12%, durable-goods orders were up 1.3% to $154.8 billion.

US Durable Goods New Orders Chart

US Durable Goods New Orders data by YCharts.

The one piece of news holding back the Dow is Caterpillar's weak outlook for the U.S. economy. While the construction equipment maker reported earnings that beat expectations, the market is focused on the company's outlook. This quarter, construction equipment sales fell 17% in North America to $1.44 billion. CEO Doug Oberhelman commented that "2013 could be a tough year" if it were like 2011 and 2012, when the second half of the year was much weaker than the first half of the year.

Today's Dow leader
Today's Dow leader is Caterpillar (NYSE: CAT  ) up 1.4%. While the construction maker gave a cautionary outlook for 2013, the stock is still up today on positive earnings. The construction equipment maker reported earnings of $1.04 per share. The low earnings include a $0.87 per-share write down due to accounting errors at an acquisition from last year. Excluding the writedown, earnings were $1.91 per share, still down from last year's $2.32 but above analyst expectations of $1.69 per share.

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in our brand-new report. Just click here to access it now.

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9/23/2016 4:00 PM
CAT $82.44 Down -1.06 -1.27%
Caterpillar CAPS Rating: ***