CAT’s Warning a Market Hex — Tuesday’s IP Market Recap

by Marc Bastow | September 25, 2012 5:25 pm

[1]Positive reports on the U.S. housing market and consumer confidence got the market off on a good foot on Tuesday as the S&P/Case-Shiller index showed home prices in 20 major cities rose[2] for a third consecutive month, while the index of consumer confidence[3] shot up over 70, well ahead of the 63 reading anticipated by economists.

However, negative comments from Federal Reserve Bank of Philadelphia president Charles Plosser, worries about global economic growth and a dour outlook by one of the Dow Jones’ biggest stocks crushed the market spirit as stocks tumbled into the red for a second straight day.

Dow component Caterpillar (NYSE:CAT[4]) warned analysts and investors[5] that it expected global economic woes to give it a rough time all the way through 2015, cutting its earnings forecasts [6]for the next three years. Investors sent the stock down more than 4% on the day, proving a major drag on the Dow.

The Nasdaq was hammered by 1.36%, closing at 3,117, the S&P lost 1.05% to 1,441 and the Dow lost 0.75% to 13,457.

CAT joins in a recent list of long-term warnings issued by FedEx (NYSE:FDX[7]) and Norfolk Southern (NYSE:NSC[8]) over the past month.

The Nasdaq and S&P 500 were impacted by Apple‘s (NASDAQ:AAPL[9]) fall of 2.5% as the stock took a breather from last week’s dizzying heights.

The U.S. retail sector got a boost as Toys “R” Us joined Wal-Mart (NYSE:WMT[10]) and Kohl’s (NYSE:KSS[11]) in announcing major hiring[12] figures for the upcoming holiday season. Toys “R” Us will add 45,000 temporary workers to get it through the season.

Also Tuesday, luxury retailer Michael Kors (NYSE:KORS[13]) priced a secondary equity offering of 23 million shares, capitalizing on its fantastic post-IPO success[14]. However, the offering took the wind out of KORS’ sails for the day, with shares trading down more than 4%.

Coming on the heels of a blowout quarter that saw ConAgra (NYSE:CAG[15]) beat top- and bottom-line Street estimates[16], the company announced it would spend $100 million[17] to start production of Bertolli and P.F. Chang’s packaged frozen foods at its local manufacturing facility in Russellville, Ark. The move is anticipated to add 80 new jobs to the region.

Electric automobile maker Tesla Motors (NASDAQ:TSLA[18]) saw its shares drop nearly 10% after filing documentation[19] with the SEC that included warnings about production and delivery targets. The company also forecast continued delays and lower ongoing revenues.

Three Up

• Research In Motion (NASDAQ:RIMM[20]): Up 4.8% (30 cents) to $6.60.
• Leapfrog (NYSE:LF[21]): Up 4.5% (37 cents) to $8.54.
• Burger King (NYSE:BKW[22]): Up 3.1% (45 cents) to $14.98.

Three Down

• RadioShack (NYSE:RSH[23]): Down 16.3% (50 cents) to $2.56.
• Green Mountain Coffee Roasters (NASDAQ:GMCR[24]): Down 7.7% ($1.98) to $23.88.
• Genworth Financial (NYSE:GNW[25]): Down 6.85% (38 cents) to $5.17.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he was long AAPL.

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