Following a deep slump on Monday, the Dow Jones Industrial Average (^DJI 0.15%) continued heading lower on Tuesday. The Dow was down about 0.23% at 1:30 p.m. EDT as cases of COVID-19 continued to increase rapidly in the United States.

Solid earnings reports from Merck (MRK 0.38%), Caterpillar (CAT 0.85%), and 3M (MMM 0.24%) failed to prevent the Dow from underperforming the other major indices. All three companies beat analyst expectations, and Merck and 3M reported revenue growth for the third quarter.

A line of 5 young men and women wearing hard hats, safety vests, and masks.

Image source: Getty Images.

Soaring cases and no stimulus deal

The number of confirmed daily cases of the novel coronavirus in the U.S. has broken records in recent days, exceeding the previous peak reached over the summer. The U.S. has recorded an average of roughly 70,000 new cases per day over the past week.

The new surge in cases could put a serious damper on the economic recovery, which partly resulted from people acting more cautiously and partly due to local governments ramping up efforts to slow the spread. There won't be any new stimulus measures at the federal level in the near term to prop up consumer spending: The Senate will be in recess until Nov. 9.

Earnings beats for Merck, Caterpillar, and 3M

While the Dow was being dragged down by COVID-19 fears, a few Dow components managed to report quarterly results that beat expectations.

Pharmaceutical giant Merck managed to report a small 1% revenue increase to $12.6 billion for the third quarter, beating the average analyst estimate by $340 million. Adjusted earnings per share (EPS) of $1.74 were up 16% year over year and $0.31 ahead of expectations.

Merck estimates that the COVID-19 pandemic hurt its pharmaceutical revenue by roughly $475 million during the third quarter. The total revenue impact now stands at $2.1 billion by Merck's reckoning. Demand for certain vaccines was hurt by lower back-to-school demand, and reduced access to healthcare providers dinged sales as well.

For the full year, Merck expects to produce revenue between $47.6 billion and $48.6 billion, along with adjusted EPS between $5.91 and $6.01. Merck stock was up about 0.4% by early Tuesday afternoon.

Caterpillar's third-quarter results weren't great in an absolute sense: Revenue crashed 23% year over year to $9.9 billion, and earnings per share tumbled more than 50% to $1.22. But the heavy machinery manufacturer's results were less bad than analysts were expecting. Revenue was $120 million ahead of estimates, and adjusted EPS beat expectations by $0.17.

The sales decline hit all of Caterpillar's segments roughly equally. The company continued to withhold any guidance as the uncertainty surrounding the pandemic remains elevated. Shares of Caterpillar were down about 2.8% by early Tuesday afternoon.

Shares of 3M also took a hit on Tuesday, down 1.3% despite a reasonably strong third-quarter report. Revenue was up 4.5% year over year to $8.4 billion, slightly ahead of analyst expectations. Adjusted EPS came in at $2.43, down 5.8% from the prior-year period but $0.16 higher than the average analyst estimate.

3M's healthcare sales soared 25.5% to $2.2 billion in the third quarter, with organic local-currency sales up 8.1%. Medical solutions, separation and purification, and oral care all experienced sales increases, while there was weakness in food safety and health information systems.

3M is also not providing any guidance due to the uncertain impact of the pandemic. The company did say that it expects October sales to range from flat to a low single-digit percentage. That estimate factors in one fewer business days compared to October of last year.

While Merck, Caterpillar, and 3M had stronger quarters than analysts were expecting, the good news largely lost out to escalating pandemic fears.