Why Caterpillar Couldn't Give the Dow a Lift

After a huge bull run, even good news can't always keep pushing the stock market higher. Given today's favorable readings on the latest durable-goods numbers from the Census Bureau, which reported a rise of 4.6% overall, or 1.3% excluding volatile transportation figures, the factors that have lent credence to a faster economic recovery continue. Yet stocks couldn't hold onto their gains from last week, and as of 10:45 a.m. EST, the Dow Jones Industrials (DJINDICES: ^DJI  ) were down 10 points, with the broader S&P 500 (SNPINDEX: ^GSPC  ) falling about a quarter-percent.

Even gains in Dow component Caterpillar (NYSE: CAT  ) couldn't lift the blue-chip index. Caterpillar beat earnings estimates in its fourth-quarter report this morning, sending the shares up about 1.2%. Yet the company was far from optimistic about its 2013 prospects, saying it expects earnings of between $7 and $9 per share this year, short of analysts' expectations. Moreover, the company remains cautious about the strength of the economic recovery, and without solid macroeconomic growth, it'll be hard for Caterpillar to meet its goals.

Elsewhere, 3D Systems (NYSE: DDD  ) plunged 11.6%. Fool contributor Maxx Chatsko pointed to the stock's recent price action last Friday and questioned whether the stock was nearing bubble territory. As painful as the downward move may be for existing shareholders, the stock's parabolic track upward was unsustainable. For long-term investors, the pullback provides a better entry point for additional purchases and points to a healthier path of growth for the company going forward.

Finally, 8x8 (NASDAQ: EGHT  ) fell another 3% this morning, adding to its huge loss last Friday after announcing quarterly earnings that disappointed investors. With a promising niche, the small Internet-based business communications company has kept posting solid growth in cash flow, revenue per business customer, and gross margin. If you're willing to look past the fall in GAAP earnings, you may well conclude that now is a truly attractive time to get in on the stock while it's trading at rock-bottom valuations.

Will Caterpillar beat the market?
Caterpillar's outpacing the Dow today, but what about the long haul? Find out whether Caterpillar's growth initiatives make the stock a buy by reading our in-depth premium research report on the company. Our top analysts give you the perspective you need to make a smarter decision about investing in Caterpillar. Just click here to access the report now.


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