Caterpillar Bulldozing Through Wall Street - Unpacking The Massive 8.86% Stock Elevation On The Back Of Soaring Earnings

• Caterpillar Inc.'s stock price soared significantly on Tuesday, starting the day with a 2.83% increase and ending with an impressive 8.86% gain.
• The company's strong Q2 performance, with actual earnings per share (EPS) of 5.55, exceeded market expectations by a considerable margin.
• The surge led to the stock surpassing the previous record high of $266.04.

Caterpillar Inc. CAT experienced a significant surge to the upside in its stock price on Tuesday.

The stock opened with a 2.83% increase and ended the day even stronger with an impressive 8.86% gain.

The company's strong performance in the second quarter was key to this increase.

The actual earnings per share (EPS) exceeded market expectations by a wide margin. It had an EPS of 4.91, but the company pleasantly surprised the market with an actual EPS of 5.55.

While positive earnings don't always lead to higher stock prices, Caterpillar's Q2 earnings proved to be a powerful driver for the surge in their stock price.

The stock soared to unprecedented levels during Tuesday's trading session, exceeding the previous record high of $266.04, which was set back in January 2023.

The trading session on Wednesday closed with an indecision candle, hinting at a potential correction.

After significant upward movements, it is generally typical for investors to sell in order to profit from their gains.

If a correction does occur in this case, we can anticipate the price to drop to the previous all-time high of $266.04, which now serves as a support level.

Additionally, the daily 20 simple moving average, which lies at $259.76, could provide another level of support.

Long-term investors are unlikely to sell their shares prematurely, which will contribute to the stock's upward momentum.

These investors are primarily motivated by factors that can positively influence the strength of the stock, including the increase in demand for heavy equipment.

With the United States investing in considerable upgrades to its transportation infrastructure, including roads, railways, and more, Caterpillar is poised to benefit.

The Biden Administration's $1 trillion package, passed in 2021, guarantees a strong demand for Caterpillar's machinery as part of this infrastructure drive.

As the stock price continues to rise, it is approaching a significant challenge at the psychological resistance level of $300.

With just $13 left to reach this milestone, it remains to be seen whether the stock will succumb to this resistance or confidently surpass it and continue its upward momentum.

Regardless of the outcome, this stock consistently moves upward, albeit at its own pace. A pattern of increasing peaks and troughs will affirm a continuation of the longer-term bullish trend.

After the closing bell on Wednesday, August 2, the stock closed at $287.57 trading down by 0.37%.