Morning Dow Report: Caterpillar Climbs, McDonald's Misses, and Verizon Makes a Buy

Morning Dow Report: Caterpillar Climbs, McDonald's Misses, and Verizon Makes a Buy

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrials opened Monday consolidating its gains from Friday, trading roughly unchanged as of 10:45 a.m. EST after its nearly 200-point jump in its previous session. Positive economic news on Chinese exports lent some support from the international front, but for the most part investors seemed to focus on company-specific news and its impact on particular stocks and industries. Caterpillar was among the biggest gainers in early trading, while McDonald's and Verizon lost ground.

Caterpillar's 0.80% gain reflected a combination of positive responses to Friday's U.S. jobs report and China's economic news. Caterpillar's heavy-equipment business relies heavily both on the U.S. and China, with the two key markets together providing a sizable portion of the company's overall revenue. Caterpillar has been conservative in its guidance lately, with falling commodities prices weighing on its mining-equipment segment even as decelerating growth in many parts of the world has pulled back on construction-equipment sales. A stronger U.S. economy that starts creating manufacturing and construction jobs could pull Caterpillar out of its funk and get the stock moving higher again on a more sustainable basis.

For McDonald's, though, economic conditions aren't cooperating. The stock dropped 1.2% this morning after the fast-food giant announced November same-store sales growth of just 0.5% globally, accompanied by a decline of 0.8% in its U.S. market. The challenges of a competitive market have forced McDonald's to respond with a variety of menu additions, but a varied menu also creates problems in delivering the high-speed service that fast-food customers demand. As controversy builds over raising the minimum wage, McDonald's could soon face a labor crisis to go with its flagging sales.

Verizon fell 0.4% after announcing it would acquire content-delivery specialist EdgeCast Networks for an undisclosed sum. Given the importance of delivering ever-growing streams of content more quickly and efficiently, the purchase makes sense as part of Verizon's overall attempt to provide digital-media solutions to professional enterprise customers, as well as for its own network. The move will also give Verizon thousands of additional customers to serve, including high-profile names like Twitter, Pinterest, and Hulu.

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