Dow Jones Today: Stocks Tumble After Meta Earnings; Yields Spike on GDP Data (2024)

Caterpillar Stock Sinks as Lower Sales Offset Profit Beat

2 minutes ago

Caterpillar (CAT) shares fell sharply in intraday trading Thursday as lower-than-expected sales offset a stronger profit than analysts estimated.

The construction vehicle and engine manufacturer reported $15.8 billion in total revenue, short of analyst estimates compiled by Visible Alpha of $16.16 billion, but posted a profit of $2.86 billion, or $5.75 per share, topping estimates of $2.53 billion, or $5.02 per share.

Revenue across Caterpillar's equipment divisions was down $139 million compared with the first quarter of 2023. The company's sales especially suffered internationally, with construction equipment sales falling in Europe, Africa, and the Middle East (EAME) by 25% year-over-year, and 14% in the Asia/Pacific region.

For the current quarter, Caterpillar projects sales to decrease year-over-year, but adjusted operating margins should stay relatively the same thanks to higher prices.

Shares sank 7.2% to $337 midday Thursday. Still, the stock has gained 14% so far this year and 54% in the past 12 months.

-Aaron McDade

Nvidia Gains on Surging AI Hyperscaler Spending

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One clear beneficiary of Meta’s spending spree: Nvidia (NVDA), shares of which climbed on Thursday as those of its hyperscaler customers tumbled amid concerns about spending on artificial intelligence offerings that are still years from meaningfully adding to the bottom line.

Meta (META) on Wednesday evening raised its full-year capital expenditure (capex) forecast to a range of $35 billion to $40 billion from a prior range of $30 billion to $37 billion. The high end of the new range would represent a 50% year-over-year increase in spending. Between 2020 and 2023, full-year capex averaged less than $23 billion.

And Meta plans to increase spending further in 2025, as “we invest aggressively to support our ambitious AI research and product development efforts,” said Chief Financial Officer Susan Li on the company’s earnings call.

Much of Meta’s expenses will come from investments in servers and data centers required to train large language models and run Meta AI, the company’s answer to OpenAI’s ChatGPT. That will benefit Nvidia and other advanced semiconductor makers, whose products and services are the building blocks of AI systems.

Nvidia shares were up 3% Thursday morning, while Meta tumbled nearly 12%. Microsoft (MSFT) and Alphabet (GOOGL), two of Meta’s biggest competitors in the AI arms race, traded 4.4% and 2.7% lower, respectively. Meanwhile, shares of Nvidia peers Broadcom (AVGO) and Advanced Micro Devices (AMD) were up 2.3% and 0.6%, respectively.

IBM Stock Drops After Confirming $6.4B HashiCorp Acquisition, Posting Q1 Revenue Miss

1 hr 29 min ago

Shares in IBM (IBM) plunged more than 9% in early trading Thursday after the computing and consulting giant confirmed it will acquire cloud software maker HashiCorp (HCP) for $6.4 billion and posted quarterly revenue that came in short of Wall Street expectations.

The company said it plans to acquire HashiCorp for $35 per share in a cash deal, valuing the transaction at $6.4 billion, confirming a report in The Wall Street Journal on Tuesday that the two firms were closing in on a deal.

Turning to Big Blue’s quarterly results, the company posted first-quarter adjusted earnings of $1.68 per share, above analysts’ forecast of $1.60 a share. While revenue in the period of $14.46 billion improved 1.5% from a year earlier, it came in below the $14.55 billion consensus view.

IBM's share price broke out from a multi-month rising wedge in late January but has failed to remain above the pattern’s top trendline, recently falling to its lower trendline. Amid news-related selling, investors should closely monitor the $165 level, an area on the chart that may attract buying interest near the prior December 2023 swing high and rising 200-day moving average.

-Timothy Smith

GDP Data Shows Economy Slowing, Inflation Accelerating

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The U.S. economy as measured by the inflation-adjusted Gross Domestic Product (GDP) grew at an annualized rate of 1.6% in the first quarter, down from 3.4% in the fourth quarter of last year, the Bureau of Economic Analysis said Thursday. That was below the median forecast of 2.2% according to a survey of economists by Dow Jones Newswires and theWall Street Journal.

And in a setback in the fight against inflation, the report showed consumer price increases accelerated, rising to a 3.4% annual rate from 1.8% in the fourth quarter.

Consumer spending, the main engine of the U.S. economy, decelerated in the first quarter according to the GDP report, slowing to a 2.5% annual growth rate from 3.3% in the fourth quarter. Decelerating state and local government spending and exports also contributed to the slowdown.

Treasury yields jumped following the report as accelerating inflation shrank the odds the Federal Reserve will lower interest rates as soon as previously forecast. The 10-year yield, which influences rates across the economy, soared as high as 4.74%, its highest since October.

-Diccon Hyatt

Stocks Making the Biggest Moves Premarket

2 hr 48 min ago

Gains:

• Union Pacific (UNP): Shares of the railroad operator rose more than 4% after its quarterly results topped Wall Street estimates on the top and bottom lines despite what it called a “challenging freight environment.”
• American Airlines (AAL): Shares rose more than 3% after the airline reported a first-quarter loss but gave upbeat current-quarter guidance.
• Merck & Co. (MRK): Shares of the pharmaceutical giant rose more than 2% after it beat expectations with its first-quarter earnings and raised its full-year outlook after a strong quarter for sales of its blockbuster cancer drug Keytruda.
  

Losses:

• Meta Platforms (META): Shares tumbled 15% after the Facebook parent offered a so-so current-quarter revenue forecast and raised its full-year capital expenditures forecast as it spends to build out artificial intelligence infrastructure.
• International Business Machines (IBM): Shares of the computing company fell nearly 10% after it missed first-quarter sales estimates and confirmed its plans to acquire cloud software maker HashiCorp (HCP) for $6.4 billion.
• Caterpillar (CAT): Shares of the industrial equipment maker shedmore than 5% after its first-quarter revenue came up short of forecasts amid a decline in sales volume.

Stock Futures Lower as Meta Drags on Tech

3 hr 20 min ago

Futures contracts connected to the Dow Jones Industrial Average were down about 0.6% in premarket trading on Thursday.

S&P 500 futures were off about 0.8%.

Nasdaq 100 futures traded 1.1% lower about an hour before markets opened.