Investors hit the brakes on Caterpillar midweek. The stock dropped as much as 4% on Wednesday, touching $742.01 at the session low. From its late June peak of $1,064.90, the shares are now roughly 30% lower, putting them on track to be down more than 30% from that record. The latest slide lined up with a broad selloff in chip makers and other AI infrastructure names.
Fresh inflation readings have investors worrying the Federal Reserve could lean toward more aggressive rate hikes than they had penciled in. That has rattled the highfliers tied to building out AI - think data centers and the equipment that powers them - where traders had already been uneasy about how fast prices had run.
There is still a long view to keep in mind. Over the last 12 months, power generation">Caterpillar shares, and its construction equipment segment is growing rapidly.
When markets present fresh signals, staying informed matters, so sign up for the free Market Briefs newsletter
Earnings are on deck later this month. Across machinery makers, costs for freight and raw materials have been rising, which means margin growth will hinge more on volume, according to Jefferies analyst Stephen Volkmann. As he put it this week, "Topline demand in machinery remains robust and is spreading well beyond data centers, but investor concerns are focused on the potential for price/cost margin pressure amid continued commodity inflation."
Because the economic landscape can shift quickly, get concise daily context from the free Market Briefs
