We are in the heart of the first-quarter earnings season, with results coming in hot and heavy. After solid numbers from the early reporters — primarily in the technology and financial sectors — we are starting to get statements from the industrials and other manufacturing names. And boy, the results aren’t pretty, as many of the macroeconomic headwinds, including a global slowdown in manufacturing activity, hit these issues square in the jaw. Blue-chip stocks are not immune from the damage.
Remember, expectations of rate cuts from the Federal Reserve are predicated on uneven economic growth. That is tied in large part to the trade tensions between the United States and China. And that is having a real impact on the bottom line of many of the largest companies listed on U.S. exchanges.
Here are four blue-chip stocks suffering declines:
Blue-Chip Stocks: Caterpillar (CAT)
Caterpillar (NYSE:CAT) shares are down hard, losing nearly 5% on Wednesday, testing below their 200-day and 50-day moving averages. This sets the stage for a possible drop back to the lows set in late May, which would be worth a loss of roughly 10% from here and would extend a long, slow downtrend pattern that’s been in play since January 2018.
The company reported earnings of $2.83 per share, missing estimates by 28 cents per share on a 3% rise in revenues. Management lowered forward guidance as well, looking for modest sales growth as trade tensions with China continue. Dealer inventories have also been a drag.
Boeing (NYSE:BA) shares fell more than 3% on Wednesday to drop back below their 200-day moving average after topping near $380 on resistance going back to March. The company reported a large miss and announced a delay to its 777X program, adding to its woes on the 737 MAX program. The non-GAAP loss totaled $5.82 per share on a 35.1% drop in revenues. Management has continued to suspend full-year guidance.
What really tripped the stock up, however, was word the MAX grounding would impact cash flow beyond 2019. Watch for a decline back to the December low, which would be worth a loss of nearly 20% from here.
Tesla (NASDAQ:TSLA) shares are down more than 13% today after reporting disappointing numbers. A loss of $1.12 per share was 76 cents worse than expected despite a 58.7% rise in revenues. Gross margins fell 1.3% to 18.9%. While capex spending plans were reduced slightly, the company remains on track for the start of production on the Model Y and the opening of the Shanghai Gigafactory.
What’s troubling is that despite the company’s aggressive growth efforts, its push downmarket hasn’t quelled its cash burn rate or bolstered its profitability. That calls into question CEO Elon Musk’s desire to be an increasingly mainstream company rather than a maker of high-end specialty sports sedans and SUVs.
While Deere (NYSE:DE) hasn’t reported earnings this week, it’s vulnerable to the selling pressure hitting Caterpillar as it bumps up against resistance from its late-April high. Watch for a possible drop to test support from the January-May, which would be worth a loss of roughly 8% from here, on worries the trade tensions with China continue to weigh on U.S. farm products and thus, agricultural equipment sales.
The company last reported earnings on May 17. Earnings of $3.52 missed estimates by 11 cents on a 5.4% rise in revenues. The company will next report on Aug. 16 before the bell. Analysts are looking for earnings of $2.86 per share on revenues of $9.4 billion.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.