Shares of Caterpillar Inc. (NYSE:CAT) were down 2.01% at the bottom of the noon hour on May 1. The Dow Jones Industrial Average had shed 255 points in early afternoon trading. The threat of rising interest rates have rattled the markets once again, and comments from Caterpillar leadership following stellar Q1 results have also set the stock back.
Caterpillar released its first quarter results on April 24. Sales and revenue climbed to $12.9 billion compared to $9.8 billion in Q1 2017. Adjusted profit per share increased to $2.82 over $1.28 in the prior year. Construction industries saw a boost from positive construction activity in North America and continued infrastructure development in China. The U.S. and China are still in the midst of negotiations in an attempt to avoid billions in tariffs from either side.
The big news came when Caterpillar CFO Brad Halverson said its Q1 profit would be the “high-water mark for the year” due to increased investment in late 2018. This sent the stock down on the same day and into late April. Shares of Caterpillar are now down 8.3% in 2018. The stock also offers a quarterly dividend of $0.78 per share representing a 2.1% dividend yield.
There is considerable anxiety on Wall St. ahead of the next Federal Reserve meeting. Combined with uncertainty over trade there is the familiar impulse to “sell in May and go away”. However, odds makers are betting that the Fed will hold in May and move for a June rate hike.
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