Caterpillar Holds Back an Upbeat Dow

The market's short stay in the red this week has ended as U.S. indexes resume their push toward new record highs like those achieved last week. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is doing its part, having climbed 89 points, or 0.61%, as of 2:25 p.m. EDT. Just three members of the Dow are losing value today, including an industrial laggard that hasn’t had much to celebrate recently. Let’s get caught up on the details.

Caterpillar's Asia problem
(NYSE: CAT  ) just can't catch a break. Shares of the global manufacturing giant haven't performed well lately, and today the stock's down 1.5% to rank dead last in the Dow after the company reported that its sales to dealers fell 13% over the past three months. The Asia-Pacific region, unsurprisingly, was a major culprit: Sales to the region's dealers fell 26%. Caterpillar reported an oversupply of products in China in January, and while it hopes to pick up sales in the second-leading economy, the Chinese infrastructure slowdown and government attempts to slow the housing bubble haven't helped the company's outlook. Unless things turn around across the Pacific, Caterpillar will continue to struggle; the region accounted for about a quarter of sales last year.

Other sectors are having a better day, fortunately. Shares of Merck (NYSE: MRK  ) have jumped 1.3% to rank among the top Dow leaders. The big pharma company has agreed to sell potential treatments for nervous disorders, including Parkinson's Disease, to biotech firm Cerecor. Merck can still achieve milestone payments and royalties from the development of the drugs, and it's crucial that the company continues to find new drugs going forward. The recent loss of patent protection on best-selling Singulair, along top-selling diabetes drug Januvia's link to increased pancreatitis risk, has investors uneasy about Merck's future.

The health care sector's generally performing well today, as Johnson & Johnson and Pfizer (NYSE: PFE  ) have seen shares pick up 0.85% and 1%, respectively. These two health titans are facing stronger futures than Merck, as J&J's diversity of products and Pfizer's robust pipeline of pharmaceutical candidates across a wide range of treatments have safeguarded the companies from the worst effects of the patent cliff and slower sales in Europe.

Finally, Coca-Cola's (NYSE: KO  ) back on the upswing today, continuing a good past month in which shares have grown more than 4%. The stock's up about 1% today after Coke announced a new line of zero-calorie fruit water beverages -- appropriately named "Fruitwater." Zero-calorie drinks have done well for the company recently, with sales of zero-calorie Vitaminwater and Smartwater on the rise. If Fruitwater can also appeal to calorie-counting Americans who enjoy fizzy drinks, it'll be another hit for Coca-Cola as the company diversifies away from staples like its namesake Cola.

Is there hope for a Caterpillar turnaround?
Caterpillar's been hit hard by the Chinese slowdown, but is this falling stock a turnaround candidate waiting to rise again? 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 The Motley Fool's brand-new report. Just click here to access it now.

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Related Tickers

9/23/2016 4:55 PM
^DJI $18261.45 Down -131.01 +0.00%
CAT $82.44 Down -1.06 +0.00%
Caterpillar CAPS Rating: ***
KO $42.74 Down +0.00 +0.00%
Coca-Cola CAPS Rating: ****
MRK $62.96 Down -0.06 +0.00%
Merck and Co. CAPS Rating: ****
PFE $34.26 Up +0.11 +0.00%
Pfizer CAPS Rating: ****