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Caterpillar and McDonald's earnings — What you need to know in markets on Tuesday

Myles Udland
Markets Reporter

A huge week of corporate earnings is going to ramp up notably on Tuesday.

Before the market open several major companies will report results, including Caterpillar (CAT), McDonald’s (MCD), Lockheed Martin (LMT), United Technologies (UTX), 3M (MMM), Verizon (VZ), and Harley-Davidson (HOG).

Results out of Caterpillar will be most closely watched with investors looking for any signs of inflation pressures, trade tensions, or a slowdown in economic growth out of the industrial giant, which is often seen as a bellwether for the global economy.

Caterpillar is expected to report adjusted earnings per share of $2.85 on revenue of $13.3 billion, according to estimates from Bloomberg. Seen as a proxy for the state of U.S.-China trade relations, Caterpillar shares are down 16% in the last month and off 18% this year while the Dow has gained 2.4%.

Caterpillar Inc. equipment is on display for sale at a retail site in San Diego, California, U.S., March 3, 2017. Caterpillar earnings out before the market open on Tuesday will be a major event for investors monitoring how the trade war is impacting the global manufacturing outlook. REUTERS/Mike Blake

Investors will also keep a close eye on results from McDonald’s as shares of the fast food giant have lost around 4% this year as the company continues its overhaul of many locations. Wall Street expects the company to report same-store sales growth of 3.4% during the third quarter with adjusted earnings per share coming in at $1.99 on revenue of $5.3 billion.

The economic calendar will be fairly quiet on Tuesday with the Richmond Fed’s monthly report on manufacturing activity.

Markets will also continue looking for direction on Tuesday after Monday saw the major indexes log a mixed close with the Dow losing 0.5%, or 126 points, while the S&P 500 dropped 0.4%, or 11 points, and the tech-heavy Nasdaq gained 0.3%, or 19 points.

On Monday, the S&P 500 closed just below its 200-day moving average, a key technical level that investors have been watching closely in recent sessions with this level seen as a battleground for figuring out the market’s next move.

Jonathan Golub at Credit Suisse noted Monday that right now there appear few signs of markets stress outside of stocks. “Historically, the vast majority of bear markets coincide with recessions,” Golub said.

“By contrast, some drawdowns—such as 1987—are caused by liquidity events. As a result, in addition to monitoring harbingers of economic weakness, we also track areas of market stress, including: (1) asset class volatility (currencies, commodities, rates), and (2) signs of credit disruption. At the current time, there are few indications of contagion, with market stress almost entirely contained to equities, a bullish signal for stocks.”

Coming off recent bouts of volatility and with some investors fretting over a forecasted slowdown in earnings growth next year, markets are likely to remain jittery in the days ahead.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland