Earnings season will continue this week for the Dow Jones Industrials (DJINDICES:^DJI), with eight of its components reporting earnings between Tuesday and Thursday. But if you don't have the time to look at all of those earnings reports, the two stocks you shouldn't miss are Caterpillar (NYSE:CAT) and AT&T (NYSE:T), whose results will be especially important in setting the direction of the Dow and the stock market in general.


Source: Caterpillar.

Caterpillar has been one of the most valuable companies in the Dow Jones Industrials for getting a read on the health of the global economy, because the heavy-equipment manufacturer relies not just on U.S. sales but also an extensive overseas network of distribution for its overall growth. For years, Caterpillar has watched as growth in China has inexorably slowed, and the big drop in mined-commodities prices last year threw a wrench into its long-term strategy to get more heavily into the mining business through its acquisition of Bucyrus in 2011. In response, Caterpillar has gone through extensive restructuring efforts to make itself more efficient and rein in costs. Yet the true test for Caterpillar will be whether it can take advantage of better conditions in the U.S. construction industry to get its earnings moving back in the right direction. Look for clues about Caterpillar's worldwide progress in getting its ship in order when it reports on Thursday.


Meanwhile, AT&T faces a much different situation, as its industry is fundamentally strong. Yet lately, AT&T has been under attack from other players in the U.S. wireless space, as smaller competitors aim to supplant AT&T's No. 2 position by implementing new wireless plans that try to undercut AT&T on cost. AT&T has responded not just by reasserting its higher quality but also with plan changes of its own, and that suggests that the company is concerned about the potential to have subscribers leave its ranks in favor of much-hyped competing plans. When AT&T reports its quarterly results on Tuesday, you should get a much clearer sense not only of whether the telecom giant's rivals have been successful in taking a bite out of its market share but also how AT&T proposes to answer the challenge in the long run.

All of the earnings reports that Dow-component stocks issue this week will be interesting and give useful information to Dow investors. But Caterpillar and AT&T have the best chance of either sending the Dow Jones Industrials to new highs or holding the average back.

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