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Stocks fell on Tuesday as a result of Caterpillar and 3M disappointed investors, but managed to recover most of their losses as McDonald's and defensive stocks like Procter & Gamble all rose.
Caterpillar dropped 6.6 percent following the release of its results. The company said its manufacturing costs rose. Material costs have been driven by higher prices and tariffs. This drop adds to the Caterpillar's steep monthly losses. Through Monday's close, the stock is down 15.6 percent for the month.
The U.S. and China have implemented tariffs on billions of dollars worth of their goods this year, increasing the costs of the global economy. Negotiations between the two countries have recently been increased, which is expected to increase.
"We just look like we're getting a deal with China," said Art Hogan, chief market strategist at B. Riley FBR. "The ramifications of a prolonged trade war are really seeping into investors' minds right now."
"I think we're coming to a capitulation point," he said.
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