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Earnings Hangover Hits Caterpillar and Microsoft

U.S. stock markets have strolled sideways today as investors digest earnings and economic data released over the past week. On the economic front today, the Department of Labor said unemployment claims rose slightly to 343,000, in-line with expectations. Durable-good orders also rose 4.2%, which was ahead of expectations of 2.3% on strong orders for aircraft. When you pull out defense and aircraft orders, the gauge was up 0.7%, showing modest improvement in economic activity. With 35 minutes left in trading, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up a forgettable 0.09%, while the S&P 500 (SNPINDEX: ^GSPC  ) has gained 0.25%. 

There were a few big losers on the Dow today, driven by quarterly reports. Home Depot (NYSE: HD  ) fell 2.3% after homebuilders Pulte and D.R. Horton reported disappointing earnings. The housing market has been improving since the financial crisis, but rising interest rates over the past two months could hurt momentum and indirectly hurt Home Depot. Whether it's new homes or existing homes, improvement in the housing market helps Home Depot, so bad results from builders do not bode well for the company's prospects.

Caterpillar and Microsoft (NASDAQ: MSFT  ) have fallen 2% and 2.1%, respectively, thanks to an earnings hangover. Both companies have posted disappointing results over the past week for very different reasons. Caterpillar is contending with low commodity prices and slowing growth in China, and investors are concerned that continued weakness there will be a huge impact on the company.

Over at Microsoft, slowing PC sales are hampering earnings, and it doesn't appear that the company has a lot of momentum in the mobile business. Keep in mind that while results weren't outstanding, the company did grow revenue by 10% and made a $5 billion quarterly profit even after a $900 million writedown related to the Surface RT.  

Microsoft may not be a rising star, but it's also not a dead company at this point. In fact, it's one of just a few companies that dominate tech. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

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9/23/2016 4:55 PM
^DJI $18261.45 Down -131.01 -0.71%
^GSPC $2164.69 Down -12.49 -0.57%
S&P 500 INDEX CAPS Rating: No stars
HD $127.79 Down -0.96 -0.75%
Home Depot CAPS Rating: ****
MSFT $57.43 Down -0.39 -0.67%
Microsoft CAPS Rating: ****