Caterpillar, Eaton results show tariff hit, cast doubt on hottest Wall Street

Caterpillar and Eaton reported financial results Tuesday that disappointed investors as President Donald Trump ‘s tariffs start to bite, casting doubt on an industrial sector that was one of Wall Street’s hottest trades this year. Caterpillar’s quarterly profit took a big hit compared to the same period last year as Trump’s tariffs increased manufacturing costs. Eaton, meanwhile, issued third-quarter earnings guidance that disappointed investors, forecasting $3.01 to $3.07 per share compared to $3.09 expected by Wall Street. Caterpillar’s stock was largely flat while Eaton shares fell more than 7%. Caterpillar’s quarterly operating profit fell 18% to $2.86 billion, down from $3.48 billion in the same period last year. Its profit took a hit due to “unfavorable manufacturing costs” that “largely reflected the impact of higher tariffs,” according to the company’s earnings release. “The incremental tariffs announced in 2025 and expected to be in place by August 7 will be a headwind to profitability during the remainder of the year,” Caterpillar CEO Joseph Creed told analysts on the company’s earnings call. Its construction business saw profit drop 29% compared with the year-ago period due to unfavorable prices and higher tariffs. Its resources segment that serves the mining and quarry industries saw profits decline 25% due to higher manufacturing costs associated with tariffs. The Industrial Select Sector SPDR Fund is up more than 14% this year, only behind the utilities sector which has gained more than 15%. But Caterpillar’s and Eaton’s results indicate that the industrial sector could face challenges this year due to Trump’s tariffs. TransDigm , another big member of the industrial sector, was down nearly 12% after the maker of aerospace parts cut its annual outlook.