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Market check: Stocks edge higher at open, Chevron shares slide, Caterpillar drops

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Yahoo Finance's Julie Hyman and Brian Sozzi discuss the market open, why Chevron shares are down, and Caterpillar warning of rising costs in its earnings call.

Video Transcript

JULIE HYMAN: Speaking about we're pricing in expectations, we got some economic data this morning that showed that inflation is persistent, persistent in the fourth quarter, persistent in December when it comes to wages, certainly, as evidenced by that employment cost index that rose 1% in the fourth quarter, although that was a smaller advance than estimated by economists and we got the PCE core showing its biggest gain since 1983. We'll see how stocks react to all of this today.


So yesterday we were talking about a remote bell ringing. Today it's an in-person bell ringing as we continue to see sort of this uneven recovery from COVID, reaction in the wake of COVID and how people are dealing with it. I don't know what the bell indicator-- I think I'm going to think of it now as the bell indicator.

So we have all three major averages that are trading higher at the moment, the Dow most tepidly, and that's because we've got a couple of components in the Dow not doing so great this morning. Let's start with Chevron. The company coming out with numbers that were disappointing versus what analysts have been projecting. The shares down 3.6%.

If you look at adjusted earnings per share, $2.56. That's $0.56 below what analysts had been predicting, even though revenue did come out and beat estimates. But the company is talking about, you know, maybe not doing quite as well, particularly quite as well as you would have expected given the fact that we've got these oil prices trading higher.

A little bit of context here. The shares did close at a record yesterday after the company announced it was raising its dividend, so coming off of that relatively high level with this decline today, Sozz.

BRIAN SOZZI: Yeah, maybe the CEO, Mike Wirth, should go out there and do more interviews because clearly that's working here. New note from Jefferies out across the board noting this is a weak performance across the board. That's from Jefferies. I would agree with that. Jefferies reiterating their hold rating on Chevron.

JULIE HYMAN: And finally, let's talk about that other Dow component that is showing some weakness today. That is Caterpillar. Caterpillar earnings actually topped analyst estimates, but the shares are down by 2.8%. Earnings per share coming in at $2.69. $2.27 was the forecast there. Sales up 23% to $13.8 billion, although I'm seeing 13.1 here. Any way you slice it, they beat estimates on that point.

Didn't see the forecast out of Caterpillar as of yet, to be honest, but the company is talking about ongoing supply constraints, of course, which is something that has been affecting pretty much everyone.

And, you know, Caterpillar is an interesting bellwether here because they do touch so many different parts of the globe and different parts of the industrial economy. The Caterpillar CEO did say this morning that the semiconductor challenges have not improved, so that perhaps could be something that is weighing on the company as well here this morning, Sozz.

BRIAN SOZZI: Yeah, and that reflected, Julie, in the company's margins. Operating profit margins down in all of the company's business segments, and this is-- I just want to highlight one thing that we highlighted back when the company reported its third-quarter results a couple of months ago. Another quarter of weakness in their construction business out of Asia, notably China. Within that construction industries business, one of the most-- probably the most important business for Caterpillar, sales were down 12% in the most recent quarter, in large part because of that real-estate slowdown.

JULIE HYMAN: So we'll keep watching those Caterpillar shares, and we're going--