What Happened?
Shares of construction equipment company Caterpillar (NYSE: CAT) fell 4% in the morning session after the company warned that tariffs will have a larger-than-expected impact on its financial results this year.
In an SEC filing, the construction and mining equipment giant raised its forecast for the net hit from tariffs to between $1.5 billion and $1.8 billion for 2025. This is an increase from its previous forecast, which projected an impact of up to $1.5 billion. The company also specified that these incremental tariffs are expected to cost at least $500 million in the third quarter alone, signaling significant near-term pressure on its earnings.
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What Is The Market Telling Us
Caterpillar’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 4.8% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Caterpillar is up 15.7% since the beginning of the year, and at $416.23 per share, it is trading close to its 52-week high of $438.02 from July 2025. Investors who bought $1,000 worth of Caterpillar’s shares 5 years ago would now be looking at an investment worth $2,925.
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