A sell-off in technology shares weighed on Wall Street today, with the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) posting losses, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) dropping 1.4%.
Today's stock market
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Data source: Yahoo! Finance.
The Technology Select Sector SPDR ETF (NYSEMKT: XLK) ended the session with a 1.6% loss. A rise in crude oil lifted energy stocks, though, and the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT: XOP) jumped 1.8%.
As for individual stocks, Caterpillar (NYSE: CAT) reported expectation-beating results, and US Foods Holding (NYSE: USFD) tumbled after missing expectations and announcing an acquisition.
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Caterpillar delivers upbeat quarter
Caterpillar reported stellar second-quarter results and raised its outlook for the year, but the stock closed down 2% after initially rising on the news. Revenue increased 23.7% to $14.01 billion, compared with the analyst consensus estimate of $13.88 billion. Adjusted earnings per share came in at $2.97, almost double last year's $1.49 and well above expectations for $2.73.
Continued strength in many of the company's end markets drove good sales growth in each of the Caterpillar's operating segments. Construction industries had a 24% increase in sales, thanks to high demand from China and oil and gas pipeline and non-residential construction in North America. Resource industries had a 38% sales boost on demand for mining equipment, and sales in the energy and transportation segment rose 20%.
Looking forward, Caterpillar increased its guidance for adjusted EPS for the full year to $11.00-$12.00 from a previous range of $10.25-$11.25.
Last quarter, Caterpillar sparked a sell-off in its shares and the market in general when it characterized Q1 margins as a "high-water mark" for the year. But adjusted operating profit margin for Q2 came in at 16.3%, near the high end of full-year guidance of 14%-17%. On the conference call, the company said that tariffs aren't affecting demand in China, but will add $100 million to $200 million in material costs in the second half.
Investors unimpressed by US Foods' earnings, acquisition
Shares of food distribution giant US Foods plummeted 17.5% after the company reported disappointing second-quarter results and announced an acquisition. Sales were flat at $6.2 billion and adjusted earnings per share increased 54% to $0.57. Analysts were expecting EPS of $0.58 on sales of $6.33 billion. Additionally, the company is acquiring five operating companies from privately held Services Group of America for $1.8 billion in cash.
Total case volume fell 0.9% from the period earlier, but US Foods improved profitability, increasing gross profit per case by $0.16 and growing adjusted EBITDA by 4.9%.
"While our volume growth with independent restaurants was solid, it fell below our expectation, mostly due to some operational challenges," said CEO Pietro Satriano in the press release. "We are working diligently to address these and we expect to see accelerating volumes in the second half of the year." The company lowered its guidance for case volume for the full year from 1% growth to flat.
The companies being acquired had combined net sales in 2017 of $3.2 billion. Included is Food Services of America, one of the largest regional broadline distribution companies, serving 16 states in the West and Midwest. U.S. Foods expects the deal to expand its footprint in the Northwest and be accretive to EPS in the second year following closing.
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