Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Dow Falls As Caterpillar, AT&T Weigh Down the Market

The Dow Jones Industrials (DJINDICES: ^DJI  ) lost ground from the opening bell on Tuesday morning, as investors worried about earnings reports from the retail sector that pointed to some troubling trends with implications for the broader economy. As of 11 a.m. EDT, the Dow was down 30 points. Although one index component reporting earnings actually picked up ground on the day, the worry more broadly is that results from the tough winter quarter in many cases have come in even weaker than expected. Some stocks helped lead the Dow lower, with Caterpillar (NYSE: CAT  ) and AT&T (NYSE: T  ) among those with the sharpest declines.

Source: Caterpillar.

Caterpillar dropped more than 1% after the heavy-equipment maker once again posted discouraging retail sales figures for its most recent three-month period. Many focused on Caterpillar's headline numbers, which showed overall machine sales down 13% worldwide as of the end of April. But deeper in the Dow component's results is a big disparity across different divisions and geographical areas. In the construction segment, Caterpillar actually saw sales rise 6% worldwide, with every area except Europe-Africa-Middle East posting gains. In the resources segment, though, sales plunged by half. Also, the North American market continues to hold up well for the company, with a 12% gain in sales representing the only geographical area to do better than year-ago figures. In order for Caterpillar to maximize its potential, it needs to get the key Asia-Pacific region firing on all cylinders again. But strength domestically could help Caterpillar get through tough times even as shareholders have already started expressing their optimism.

Meanwhile, AT&T fell 1.2%, adding to the Dow component's declines from Monday after it announced its buyout bid for DIRECTV. Ever since fellow Dow Jones Industrials peer Verizon completed the full takeover of its Verizon Wireless division, investors have assumed AT&T would make a deal of its own in order to bolster its growth prospects. With the need for spectrum and the importance of video entertainment in the suite of telecom services that AT&T provides, choosing a satellite service provider makes sense in light of the trend toward consolidation in the cable industry. Yet the deal is fraught with uncertainty, as some analysts have questioned whether the satellite niche is the best way for AT&T to move forward. Moreover, regulators will face the increasing challenge of evaluating proposed tie-ups in the industry, as traditional lines of demarcation between certain subsectors of the telecom area are disappearing. With substantial new debt, AT&T will have to prove to investors that the deal makes sense and will produce true long-term growth.

Recent drops from all-time record levels aren't yet a big cause for concern for the Dow Jones Industrials. As long as declines such as Caterpillar's and AT&T's are short-lived, the Dow has every ability to push higher again.

You don't want to miss this
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And everyone from BMW to the U.S. Air Force is already using it every day. Watch The Motley Fool's shocking video presentation today to discover the garage gadget that's putting an end to the Made In China era... and learn the investing strategy we've used to double our money on these 3 stocks. Click here to watch now!

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2964693, ~/Articles/ArticleHandler.aspx, 9/4/2015 10:58:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated Moments ago Sponsored by:
DOW 16,156.99 -217.77 -1.33%
S&P 500 1,927.39 -23.74 -1.22%
NASD 4,704.24 -29.26 -0.62%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 10:42 AM
^DJI $16156.99 Down -217.77 -1.33%
CAT $73.27 Down -1.18 -1.58%
Caterpillar, Inc. CAPS Rating: ***
T $32.58 Down -0.46 -1.41%
AT&T CAPS Rating: ****