Saturday, May 15, 2010

Caterpillar (NYSE:CAT) Falls on Demand Concerns

Growing concerns over the level of demand for Caterpillar (NYSE:CAT) products in light of the European crisis and China battling inflation and a potential property bubble bursting, has caused some downward pressure on the stock, and it dropped on Friday to $64.66, a loss of 3.4 percent.

The collapse in value of the euro is connected to the euro zone problem, as the U.S. dollar has risen strongly against it, making exports more costly and less competitive.

In the recent past the strength of the euro has been a bonus for exports to the region, as well as other areas of the world, as far as the dollar being weaker.

That has changed as all currencies are becoming suspect, and investors are fleeing to gold and other raw materials to protect their assets and build their wealth.

It'll probably be hard for Caterpillar to continue its gains this year with these two important regions either lowering orders or generating less revenue and profits from the increased strength of the dollar.

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