What Happened?
Shares of lifting and material handling equipment company Terex (NYSE: TEX) fell 4.9% in the afternoon session after industry bellwether Caterpillar warned of higher costs related to tariffs, sparking concerns across the heavy-equipment sector.
Caterpillar, a major player in the industrial machinery space, announced it now expects to incur expenses of $1.5 billion to $1.8 billion from tariffs in 2025, an increase from its previous forecast. The news sent Caterpillar's shares down more than 3% and created a ripple effect among its peers. Investors appear concerned that other companies in the construction and farm equipment industry, including Terex, could face similar pressures from rising costs and potentially sluggish demand due to U.S. trade policies.
The shares closed the day at $49.95, down 4.2% from previous close.
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What Is The Market Telling Us
Terex’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock gained 4.5% on the news that an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce. The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers. Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting cyclical sectors like industrials.
Terex is up 12.2% since the beginning of the year, but at $49.94 per share, it is still trading 14.8% below its 52-week high of $58.61 from November 2024. Investors who bought $1,000 worth of Terex’s shares 5 years ago would now be looking at an investment worth $2,552.
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