1 Stock Dragging the Dow Lower Today

Caterpillar is dragging the Dow Jones Industrial Average lower today after presenting its second-quarter results Thursday morning.

Jul 24, 2014 at 3:00PM

The Dow Jones Industrial Average (DJINDICES:^DJI) was trading nearly flat in midafternoon after mixed economic data hit the news feeds. On one hand, initial jobless claims last week dropped to the lowest since mid-February 2006, emphasizing that the labor market continues to gain strength. On the other hand, new home sales fell 8.1% in June on a seasonally adjusted annual basis, and May's significant 18% gain was revised down to just over 8%. Housing remains a vital part of the United States' economy and its continued weakness is partially offsetting a strong earnings season.

With that in mind, here are some companies trading lower after presenting second-quarter results Thursday morning.

Heavy-equipment manufacturer Caterpillar (NYSE:CAT) was by far the Dow's biggest loser today, trading 3.3% lower by midafternoon. CEO Doug Oberhelman sounded an optimistic note in a press release on the earnings:

We're pleased with our second-quarter results, particularly the improvement in profit. We increased the bottom line despite a weak quarter for our Resource Industries segment, which is principally mining. Three key things are contributing to the continuing strength of our financial results -- the diversity of our businesses, substantial success in operational improvements through the execution of our strategy and the strength of our cash flow and balance sheet. 

Caterpillar's second-quarter earnings per share rose to $1.57 from last year's $1.45 result. However, its resource industries segment continued to drag on consolidated profit in the company's machinery and energy transportation business.

Cat
Chart by author. Information source: Caterpillar Q2 earnings release.

Caterpillar expects the remainder of 2014 to deliver similar numbers, without much hope for improving top-line revenue. The company, though, will continue to execute on cost reduction and returning value to shareholders. Through the first half of 2014 Caterpillar reduced manufacturing, research and development, and selling, general, and administrative expenses by a significant $500 million. This has been a consistent trend during Caterpillar's downturn: Last year, the company reduced costs by $1.2 billion, helping salvage some of its bottom-line profits.

Also, from the beginning of 2013 through the end of next quarter, Caterpillar will have repurchased $6.2 billion of its stock and increased its dividend twice. The silver lining for investors who are hanging on during this rough patch is that if and when its resource industries segment improves alongside foreign mining markets, the company will have become a far more lean and profitable machine. It's just a matter of how long investors have to wait for those mining markets to improve; that could be a year out, or longer.

Outside of the Dow, America's largest automaker, General Motors (NYSE:GM)also saw its stock drop more than 4% by midafternoon. The automaker, which has been plagued by recalls of more than 29 million vehicles globally, reported a generally accepted accounting principles earnings-per-share plunge to $0.11 from $0.75 in last year's second quarter. It was mostly the result of $1.2 billion in charges related directly to vehicle recall costs, which have ballooned to total $2.5 billion through the first half of 2014. For the most part, though, the recall costs should be over for the company and its investors. GM expects the remaining recall expenses to be roughly $874 million over the next decade.

Despite the tough quarter and negative reaction by the market, GM is in spin mode and trying to look at the bright side. CEO Mary Barra said in a press release:

Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches. We remain focused on keeping our customers at the center of all we do, and executing our plan to operate profitably in every region of the world. 

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their nondividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Daniel Miller owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers