Caterpillar Shares Drop Despite Strong Q3 Earnings as Economic Concerns and Falling Order Backlogs Signal Potential Slowdown

Higher-than-expected Q3 profits surge due to U.S. infrastructure spending, but rising dealer inventories and a shrinking backlog of $2.6 billion hint at sliding demand and tension in the market.

• Caterpillar's Q3 profit increased by 41% from a year ago to $2.8 billion, surpassing analysts' expectations due to heightened U.S. governmental infrastructure spending.
• Despite increased profit, the company's product backlog decreased by $2.6 billion in Q3, signalling a decline in demand from construction companies.
• Caterpillar's dealer inventories rose by $600 million, indicating a growth in unsold machines including trucks and bulldozers.
• Sales from China, a significant market for Caterpillar, are expected to remain weak and below the typical 5-10% range of total sales.
• The company's shares fell more than 5%, reflecting economic concerns and a cautious Q4 outlook, even as the company remains optimistic and expects slightly higher sales.

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