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Dow Higher After Caterpillar Reports Earnings

By Roland Head - Apr 22, 2013 at 8:20AM

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Stock index futures pointed to a higher start for the Dow Jones this morning following Dow constituent Caterpillar's Q1 earnings report.

LONDON -- Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average (^DJI -0.75%) may open up by 0.37% this morning, while the S&P 500 (^GSPC -0.58%) may open 0.45% higher.

European markets moved firmly higher this morning, led by Italy's FTSE MIB, which was up 2% at 8:15 a.m. EDT after the country's president was reelected, strengthening his ability to broker a coalition government deal between Italy's main political parties. Italy has been without a government since general elections two months ago. Elsewhere, news that the combined debt of Britain and the eurozone had reached 90% of those countries' GDP failed to dent investors' optimism, leaving the FTSE 100 up by 0.41%. Gold also rose strongly this morning following its recent falls, and spot gold was up around 2.1% at $1,433 per ounce.

In the U.S., today's existing-home sales report at 10 a.m. EDT is expected to show that 5.03 million existing homes were sold in March, up from 4.98 million in February. The Chicago Fed national activity index, due at 8:30 a.m. EDT, may also provide further evidence of the strength of the economic recovery.

Dow constituent Caterpillar (CAT -0.57%) reported disappointing first-quarter earnings this morning. The company earned $1.31 per share, whereas analyst estimates compiled by Bloomberg had called for EPS of $1.38. Revenue of $13.2 billion fell short of expectations of $13.7 billion. Caterpillar cited a slowdown in the mining sector, for which it provides heavy machinery. Nevertheless, the company is up 1.2% in premarket trading.

Toy maker Hasbro reported a 30% increase in underlying net earnings to $6.6 million this morning, although the firm reported a net loss of $6.7 million after restructuring charges and tax adjustments were taken into account. Other companies expected to report earnings before the opening bell this morning include Halliburton, Check Point Software Technologies, NVR, and Six Flags Entertainment.

Other stocks that could be actively traded include Boeing following confirmation that the company's Dreamliner airliners are being fitted with reinforced batteries and may recommence commercial flights as soon as next week. IBM is up in premarket trading and could recover some of Friday's big losses, while Netflix and Texas Instruments may attract interest, as both are due to report quarterly results after tonight's closing bell.

Finally, let's not forget that the Dow's daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote, "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions." If you, like Buffett, are convinced of the long-term power of the Dow, you should read "5 Stocks To Retire On." Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,253.13 (-0.75%) $-236.94
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,900.79 (-0.58%) $-22.89
Caterpillar Inc. Stock Quote
Caterpillar Inc.
CAT
$206.76 (-0.57%) $-1.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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