The Dow Jones Today Is Falling as Earnings Season Claims Its Latest Victim

The Dow Jones today is trending down after a major earnings miss and a surprise downgrade to index stalwarts.

The Dow Jones shed 90 points in pre-market hours after analysts downgraded Caterpillar Inc. (NYSE: CAT) and Home Depot Inc. (NYSE: HD) missed earnings expectations.

We'll break down these developments below, plus a tech company whose shares plunged 5% amid a scandal.

Here are the numbers from Monday for the Dow, S&P 500, and Nasdaq:

Now, here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.

The Top Stock Market Stories for Tuesday

• Home Depot leads a busy day of earnings reports on Tuesday. Retail stocks are also in focus thanks to a busy slate of quarterly reports this week. This morning, Home Depot shed 3.2% after the firm missed both profit and revenue expectations. The company said that fewer Americans have been shopping for materials related to renovations and other home projects. Its adjusted EPS of $2.09 was $0.07 below trade expectations. It also missed revenue, reporting $26.49 for the quarter. The firm also reported weaker-than-expected same-store sales. Despite the miss, HD announced plans to hike its planned supply chain revitalization by another $1.2 billion.

• Today, investors are keeping a close eye on developments in Vietnam. U.S. Secretary of State Mike Pompeo has arrived in Hanoi, Vietnam, to begin the nation's second summit with North Korea and its leader, Kim Jong Un. U.S. President Donald Trump will meet with Kim on Wednesday evening for a one-on-one conversation followed by a dinner. The United States is hoping that it can reach an agreement that will see North Korea give up its nuclear weapons program. Should tensions continue to ease, it is possible that the U.S. and North Korea will formally announce that the 1950-53 Korean War is at last over.
• While President Trump attempts to alleviate tensions in the Korean peninsula, problems are growing worse in Venezuela. Yesterday, six members of Univision – including journalist Jorge Ramos – were detained by President Nicolas Maduro after the dictator objected to questions he had been asked. Maduro reportedly stopped the interview after Ramos showed the nation's leader a video of Venezuelans eating from a garbage truck. Maduro had the team detained for two hours, confiscated their equipment, and deported them. Ramos had asked other questions about the nation's ongoing political crisis, including the nation's fleeting democracy and ongoing torture of political dissidents.

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Stocks to Watch Today: TSLA, ETSY, CAT

• This morning, Swiss investment bank UBS Group AG (NYSE: UBS) announced a surprise downgrade for industrial machinery giant Caterpillar. Shares of CAT fell 3.5% after UBS flagged slowing construction demand around the world as a reason for the downgrade. The firm slashed its price target from $154 to $125. The new figure represents 8.3% downside from Tuesday morning's price. UBS expects that its EPS will fall by a whopping 8% year over year due to limited development in new construction and oil-and-gas projects.
• Shares of Tesla Inc. (NASDAQ: TSLA) slumped more than 3.5% after the SEC asked a judge to hold CEO Elon Musk in contempt of court. The SEC says that Musk violated his recent deal after promoting an inaccurate tweet about the company's production. The CEO said in a tweet that Tesla would produce "around" a half-million vehicles in 2019. However, four hours later, Musk clarified by saying that he "meant to say" that Tesla's annualized production rate by the end of the year could reach 500,000. The SEC says that Musk failed to seek or receive pre-approval for this tweet. The agency says that the inaccurate tweet reached more than 24 million people.
• Shares of Etsy Inc. (NASDAQ: ETSY) rallied more than 10% after the company topped Wall Street earnings expectations after the bell Monday. The e-commerce firm rang in EPS of $0.32 on top of $200 million in revenue. Both figures topped Wall Street expectations, which included EPS of $0.21 on top of $195 million in revenue. The firm reported a big jump in active buyers – 18.2% year over year – and a 9.4% jump in active sellers during the same period.
• Look for earnings reports from Cheniere Energy Inc. (NYSE: LNG), Cracker Barrel Old Country Store Inc. (NASDAQ: CBRL), Eaton Vance Corp. (NYSE: EV), Frontier Communications Corp. (NYSE: FTR), LendingTree Inc. (NASDAQ: TREE), Palo Alto Networks Inc. (NASDAQ: PANW), Papa John's International Inc. (NASDAQ: PZZA), Public Storage (NYSE: PSA), Weight Watchers International Inc. (NYSE: WTW), and J.M. Smucker Co. (NYSE: SJM).

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Garrett Baldwin

About the Author

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Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.

Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.

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