Caterpillar Inc. signaled cautious optimism about global growth, offering fresh evidence that many markets are in rebound mode after a years-long slump.
The world’s largest heavy-machinery maker, an economic bellwether, in its second-quarter earnings report Tuesday highlighted growing demand in China’s construction sector and a revitalization of the mining industry. The company boosted its earnings outlook for the year, despite sluggish infrastructure spending in the U.S. and weakness in Brazil and the Middle East.
The Peoria, Ill., maker of bulldozers and mining trucks said it expects revenue of $42 billion to $44 billion for 2017, up from a previous forecast of as much as $41 billion.
If that prediction is borne out, it would be Caterpillar’s first year-over-year revenue increase since 2012.
The upbeat earnings report was one of many that helped push the Dow Jones Industrial Average up 100.26 points, or 0.5%, to 21613.43. The S&P 500 and Nasdaq Composite both closed at new records.
DuPont Co. and United States Steel Corp. also topped expectations, due to improved demand for products ranging from soybean seeds to flat-rolled steel.
“This is the first time since the Great Recession ended that we’re seeing a synchronized global recovery and that’s what the markets are keying on right now,” said Scott Anderson, chief economist at Bank of the West. “In some past years, whenever the U.S. was doing well, Europe wasn’t and vice versa. Now everyone seems to be more on the same page.”
A stabilization of commodity prices has put major developing economies like China, Brazil, Russia and Nigeria on stronger footing after they were hit by a commodity-price plunge in 2014.
An International Monetary Fund index of global commodity prices has risen nearly 27% since hitting a 12-year low in 2016. The World Bank projected last month that, by next year, global economic growth would reach a seven-year high.
And stability in global manufacturing has been widespread. None of the top-15 trading partners for the U.S. were contracting in June, said Chad Moutray, chief economist for the National Association of Manufacturers.
Industrial output in the U.S. has risen steadily, climbing for the past five months, thanks in part to renewed oil and gas production to feed global demand.
The Federal Reserve’s measure of industrial production in June was the strongest since February 2015. That has helped the U.S. economy add 581,000 jobs in the second quarter despite a slowdown in consumer spending and job losses in the retail sector.
Caterpillar’s U.S. payroll grew to 48,500 employees by the end of June, an increase of 2,000 over the previous three months, and Caterpillar is hiring at factorie...
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