Published: Thu, January 31, 2019
Money | By Ethel Goodwin

Caterpillar swings to 4Q profit, but still falls short

Caterpillar swings to 4Q profit, but still falls short

The Deerfield, Illinois-based company also issued a 2019 profit forecast range which, at the low end, was below the average of analysts' expectations, adding to worries over mounting trade tensions that pummelled the heavy-equipment maker's shares a year ago.

Nvidia, the biggest maker of chips for computer graphics cards, on Monday echoed those comments, saying that "deteriorating macroeconomic conditions, particularly in China, impacted consumer demand" for its products.

The company forecast 2019 adjusted profit of US$11.75 to US$12.75 per share, compared with the average analyst estimate of US$12.73, according to IBES data from Refinitiv.

Looking forward, Caterpillar forecast "a modest sales increase" in 2019, and said construction equipment sales in China would be flat.

U.S. stocks dived on Monday, as weak forecasts from Caterpillar Inc and Nvidia Corp fueled worries about a slowdown in China taking a bigger bite off corporate profits.

The treatment of restructuring costs by industrial companies has been a matter of hot debate lately, given the extent to which the exclusion of these expenses can distort earnings.

Analysts say there might be moves to trim China's massive trade surplus with the US that could stave off further hikes in punitive tariffs imposed by both sides.

Stocks opened broadly lower after two major USA companies dropped after saying that weakness in China's economy was weighing on their results.

Caterpillar fell well short of fourth-quarter profit expectations and the machine maker said that sales have begun to slow in China. The S&P industrial index dropped 1.32 percent. "China trade war", Hooper said.

"Without China growing at a good clip it will be hard for the global economy and the continue an expansion", Nauman said.

The S&P 500 is up 137.00 points, or 5.5 per cent. Emerging-market stocks slipped while their currencies climbed.

Apple CEO Tim Cook said in a letter to shareholders this month that demand for iPhones is waning and revenue for the last quarter of 2018 will fall well below projections, a decrease he traced mainly to China.

Crude oil prices tumbled 3% overnight on rising concerns of a demand slowdown from China and evidence of increasing United States oil output, which inhibits the oil market from reaching a supply-demand balance.

Stocks are opening broadly lower on Wall Street as traders worry about the impact on US companies of a slowdown in China's economy. Also upcoming are a meeting by the Federal Reserve on interest rates, the report and earnings reports from about a quarter of all the companies in the S&P 500 index. -China trade talks and the Fed sounding a dovish message, leading her to be optimistic, Kane said.

Bond prices rose. The yield on the 10-year Treasury note dipped to 2.74 percent from 2.75 percent late Friday.

Stocks on Wall Street fell more than 1 percent.

At 12:44 p.m. ET the Dow Jones Industrial Average .DJI was down 338.08 points, or 1.37%, at 24,399.12, the S&P 500 was down 31.94 points, or 1.20%, at 2,632.82 and the Nasdaq Composite was down 103.65 points, or 1.45%, at 7,061.21.

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