CAT

Of course, many larger things are happening in global markets right now. Fresh dips of August are still far from possible ultimate lows, as I wrote about the other day. Volatile moves make short-term technical patterns very changeable, the S&P 500 has a realistic chance to test the levels below 5,000 points, and so there is still a lack of solid foundations even for modest bullish exercises in trading strategies. Techs are still sliding down, as most AI-related stocks do not feel the floor beneath their feet. Corporate earnings recede into the background to some extent, yet I decided to make some notches on the trees nearby which could help me, and maybe you too, to come out of this jungle a little faster than others when needed.

Caterpillar distinguished itself as a potential better-than-the-market issuer after it reported a record adjusted EPS (equity per share) on higher operating profit margin, despite a 4% decrease in quarterly revenue YoY. The company's own estimates for 2024 sales were slightly lower, but with profit margin being expected above the top end of the consensus target range. Stable and even growing demand for its large excavators and other construction machines, when high infrastructure spending is going on in the United States took Caterpillar's share price up in the midweek, from fresh 7-month lows at $307 before the quarterly numbers to above $335, or 9% higher, at the peaking point on Wednesday. The industrial giant partially pared these gains to end yesterday's regular session well off the highs at $325.80. Fragile move well below $300 still looks as an option, if the rest of the market would go south once again, yet there are already fundamentals to resurface quickly when the Wall Street horror show comes to the end.

Prices are still inside the disputed watershed territory, ranging from $320 to $335, which is clearly and repeatedly visible on charts. The way how the crowd will go out of this area may give a clue to the further direction for Caterpillar, but maybe for some Wall Street segments as well, as this giant company is one of usual bellwethers for economic temperature on a global scale. Caterpillar reported Q2 2024 results a week later than anticipated to provide one of the crucial slices of industrial reality. Three months ago Caterpillar CEOs warned the company's business was cooling as many dealers seemingly preferred to tighten up on equipment inventories in the footsteps of the previous boom. Services growth may grow in the second half of the year, they said in August.

There is a contradictory environment as bearish risks include softening demand for rental fleet and customer purchase delays, a forecasted construction industries sales decrease by 7%, resource industries sales drop by as much as 10%, according to them. However, expected bullish highlights are energy and transportation segment's sales rise by 2%, financial products' revenues' potential growth by 9%, as well as stronger demand for reciprocating engines and solar turbines, particularly for data centres’ power generation. The company added it may partially focus on testing battery-electric large mining trucks and hydrogen-capable gas generator sets. Very soon we will see what will prevail, pro or con factors.