The US stock market plunged today over investor doubts that corporate America can sustain its present profit level. Caterpillar soared yesterday on better than expected earnings but led the market down after the company said on a late morning conference call that its stellar first quarter would be the “high water mark” for the year. Google rose last night when the company reported better-than-expected earnings but fell today when it said that it would have to spend more than expected to stay ahead of its rivals.
Among the worst-performing sectors is industrial machinery, not a good portent for economic forecasts that presume a high level of capital investment. Financials rose sharply in the morning, with the regional bank index up early 3%, but fell along with the rest of the market. Tech is getting hammered as well. Asia Unhedged has taken a dim view of the tech bubble all year. The apparent peaking of industrial profits, though, suggests that the stock market is looking towards a negative 2018.