By Joyce Yu
Philadelphia, PA–Wall Street opened high Tuesday on better earnings report from Caterpillar but soon retreated into negative territory due to rising yields. Investors seem to be taking profit amid market volatility.
Announcing their first quarter earnings today include 3M, Caterpillar, Coca-Cola, Lockheed Martin and Verizon. Caterpillar gave a huge vote of confidence by lifting its 2018 profit. Its first-quarter results also beat analysts’ estimates on sales and earnings as demand for the signature yellow machines accelerate, seeing continued strength for construction in North America and infrastructure in China.
“Every end market was weaker a year and a half ago, and since then we’ve had markets popping back up,” Rob Wertheimer, an analyst at Melius Research LLC, said in an interview in New York before the earnings report. “There’s actually strength in a lot of these markets now, but we’re not yet at a point where we’re fearing there’s a peak.”
The B. Riley FBR chief market strategist Art Hogan feels the same way that stock market looks ‘pretty fantastic’ despite rising yields. He may see stocks soaring around 12% this year, and thinks the Wall Street is too “hyper-focused” on yields right now. He doesn’t see it emerging as a detriment to the market unless it surged over 3.50% level.
To him, a trade policy mistake is probably the biggest fear. “We have a lot of momentum in front of us, and the only impediment has been a fear of a mistake — either a monetary policy mistake or a trade policy mistake.”
On the contrary, Rainer Michael Preiss, executive director at Taurus Wealth Advisors, doesn’t feel as optimistic. He is predicting the U.S. stocks to fall 30 to 40% over time. Describing his view as realistic, Preiss said, “Don’t forget that we are (at a) late stage cycle.”He added that investors could be spooked if certain parts of the U.S. economy slow at the same time that interest rates are rising.
