New York, February 1, 2026, 12:02 (EST) — Market closed.
- CAT closed Friday at $657.36, slipping roughly 1.1%, before Monday’s reopening
- Tariffs and AI-fueled spikes in data-center power use are clashing in the near term
- The U.S. factory survey this week and the Feb. 6 jobs report may shift rate expectations — and impact cyclicals
Caterpillar (CAT.N) shares ended Friday around 1.1% lower, closing at $657.36. The stock fluctuated between $650.50 and $677.47 during the session. Since Wall Street is closed Sunday, Friday’s close will guide early trading this week.
The setup is crucial since Caterpillar now serves as a real-time gauge for two conflicting trends: the AI-driven surge in data-center building, and rising tariffs pushing up costs in the industrial sector. Traders frequently compare its performance with Deere & Company and Komatsu, which also face similar risks tied to construction and mining cycles.
On Jan. 29, the company reported fourth-quarter sales of $19.1 billion, marking an 18% increase, with adjusted earnings of $5.16 per share. It also announced plans to return $7.9 billion to shareholders through buybacks and dividends in 2025. Sales climbed across construction industries ($6.9 billion), resource industries ($3.35 billion), and power and energy ($9.4 billion). “With a record backlog, we enter the new year with strong momentum,” Joe Creed stated in the release. ([Caterpillar Investors][1])
Caterpillar’s latest update put a sharper focus on the tariff impact, flagging roughly $2.6 billion in related costs for 2026 — up from $1.8 billion last year. The company also warned its annual adjusted operating margin, excluding certain items, could end up near the low end of its target range. Orders for “prime power” systems — large generators meant to run nonstop — are climbing as data-center clients seek on-site electricity, the company noted. Still, operating profit dropped 9% this quarter. “Better-than-expected sales across business segments were hindered by tariff headwinds, limiting the margin expansion for the quarter,” said Stephen Volkmann of Jefferies. Despite this, Caterpillar’s stock has rallied around 60% over the past year. (Reuters)
Broker notes on Friday highlighted that divide. Oppenheimer bumped its price target to $729 from $700. JPMorgan Chase and Wells Fargo followed with their own upgrades, according to MT Newswires. Caterpillar wrapped up January with a gain of about 14.8%, adding nearly 5% just in the last five sessions. (MarketScreener UAE Emirates)
Risk appetite weakened heading into the weekend. On Friday, the Dow dropped 0.36%, the S&P 500 slid 0.43%, and the Nasdaq fell 0.94%. This followed Donald Trump’s announcement of Kevin Warsh as Jerome Powell’s successor at the Federal Reserve. Investors also digested earnings reports and inflation figures. “Markets are calibrating to Trump’s pick of Kevin Warsh … and the outlook for monetary policy,” said Michael Hans, chief investment officer at Citizens Wealth. (Reuters)
Producer prices, which offer an early look at inflation pressures along the supply chain, climbed 0.5% in December — marking the largest jump since July, according to the U.S. Labor Department’s Bureau of Labor Statistics. Stronger inflation readings often drive yields up, putting pressure on economically sensitive sectors like heavy equipment manufacturers. (Bureau of Labor Statistics)
Overseas demand remains unsettled. China’s official manufacturing PMI dropped to 49.3 in January from 50.1, slipping below the 50 mark that signals contraction. The non-manufacturing index also turned negative. “Beijing will have to do much more in coming months,” said Ting Lu at Nomura, highlighting risks for global machinery suppliers. (Reuters)
The bull case is getting tighter. A bigger tariff blow, weaker pricing power, or a slowdown in data-center spending could quickly unravel the stock’s rally. A rate-driven dip in cyclicals wouldn’t help either, nor would fresh signs of weaker demand from China.
The first near-term indicator arrives Monday with the Institute for Supply Management’s manufacturing PMI survey, out at 10 a.m. EST on the month’s opening business day. This diffusion index signals contraction when readings fall below 50. (Institute for Supply Management)
Traders are set to focus on the U.S. January employment report hitting Friday, Feb. 6, at 8:30 a.m. EST. This figure often shifts rate expectations and, in turn, impacts industrial stocks. (Bureau of Labor Statistics)
For CAT, Monday boils down to one key question: will investors continue backing the data-center power angle, or will tariffs and rates take center stage again? The February 6 jobs report looms as the next major test.
[1]: https://investors.caterpillar.com/news/news-details/2026/Caterpillar-Reports-Fourth-Quarter-and-Full-Year-2025-Results/default.aspx “
Caterpillar Inc. – Caterpillar Reports Fourth-Quarter and Full-Year 2025 Results
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