The Morning Journal (Lorain, OH)
Banks, Caterpillar help boost U.S. stocks
Construction and mining equipment maker Caterpillar and Post-it note maker 3M led a rally in industrial companies.
NEW YORK » Construction and mining equipment maker Caterpillar and Post-it note maker 3M led a rally in industrial companies Tuesday after they made strong third-quarter reports. Other U.S. stocks finished the day with smaller gains.
Caterpillar and 3M both raised their forecasts for the rest of the year after they did better than analysts had expected, and their stocks jumped. Combined the two companies were responsible for almost all of the 167-point gain in the Dow Jones industrial average, which sent the 30-stock index to a record high. Bond yields and interest rates rose, which helped banks, and technology companies climbed as well. Investors applauded reports from McDonald’s and General Motors while health care companies including drugmakers stumbled. Household goods makers also declined.
UBS analyst Steven Fisher said he thinks Caterpillar, as well as other companies that make construction and mining equipment, are benefiting from gains in metals and oil prices over the last year to year-and-a-half.
“There’s now a catch-up to not only meet the demand but also replenish inventories,” he said. That delayed reaction helped Caterpillar in the third quarter and he said investors have high expectations for other machinery makers.
The Standard & Poor’s 500 index gained 4.15 points, or 0.2 percent, to 2,569.13. The Dow Jones industrial average jumped 167.80 points, or 0.7 percent, to 23,441.76. The Nasdaq composite climbed 11.60 points, or 0.2 percent, to 6,598.43. The Russell 2000 index of smaller-company stocks added 2.93 points, or 0.2 percent, to 1,500.42.
Caterpillar’s revenue from construction equipment climbed, and the company said it’s getting strong demand for oil and gas machinery in North America and construction equipment in China. Its stock gained $6.56, or 5 percent, to $138.24, and it’s up 49 percent in 2017. 3M, best known for Post-it notes, said its industrial, electronics and energy and health care businesses all got stronger and it expects a larger annual profit. It added $13.10, or 5.9 percent, to $234.65.
Caterpillar and 3M are two of the biggest winners in the Dow average this year. The top gainer is aerospace company Boeing, which rose $3.68, or 1.4 percent, to $266, giving it a 71-percent jump since the start of the year.
Bond prices continued to fall. The yield on the 10-year Treasury note rose to 2.42 percent from 2.37 percent and reached its highest level in five months. That helped banks, as higher interest rates boost their profits on lending. Bank of America gained 52 cents, or 1.9 percent, to $27.68 and JPMorgan Chase rose $1.58, or 1.6 percent, to $100.92.
Technology companies recovered most of Monday’s losses. Specialty glass maker Corning jumped $1.93, or 6.4 percent, to $31.94 after its third-quarter report surpassed what Wall Street expected.