There are two main reasons:
Caterpillar missed earnings expectations not because of revenue, but because costs came in higher than expected. Revenue was $14.43 billion, beating Wall Street estimates of $14.35 billion. But earnings per share was $2.82, badly missing analyst's expectations of $3.12.
Higher material costs put a dent in Caterpillar's costs for the quarter, as a result of current tariffs. "The increase in manufacturing costs was primarily due to higher material costs, including tariffs," the company said in its earnings press release.
That's why the S&P 500 was falling 0.22% on the day, with the Dow Jones Industrial Average, of which Caterpillar is a component, down 0.31%. Stock investors are worried that other large industrials are exposed to the same headwind, which is potentially a big hit to earnings results.
Caterpillar lowered full year 2019 guidance to the lower end of its $12.06 to $13.06 EPS range. Higher costs may be a part of that, but if part of that weaker forecast is lower revenue, the market would be afraid that lower demand for industrial goods indicates lower demand for goods and services from companies that buy Caterpillar equipment.
Energy & Transportation
This segment was one of Caterpillar's worst ones, with year-over-year declines in revenue and volumes.
Real Money, TheStreet's premium sister site, will have a story on what Caterpillar's energy and transportation results imply for the entire oil and gas supply chain. Caterpillar is Real Money's stock of the day.