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Stocks Continue to Trade Under Pressure

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Stocks Continue to Trade Under Pressure

Stocks started the US trading session in the black after experiencing significant volatility at the end of last week due to tensions that are rearing their ugly head in the Emerging Market space. The Argentine currency declined nearly 20% last week, spilling over into equity bourses just as China released a worse than expected PMI report. Caterpillar released better than expected earnings which gave US stocks a boost. Stocks gyrated throughout the trading session, but the Nasdaq never moved into the black, and in the end all three major indexes closed lower.

Tensions in the Emerging Market space have generated significant volatility putting pressure on stocks globally. The 3% decline seen in the major US equity bourses ahead of the weekend was generated by investors looking to lock in long term profits and hedge the gains made during the course of 2013. The 25% increase in inflation in Argentina combined with a route of their currency was the focus for US equity traders prior to the weekend.

Prior to the opening bell, Caterpillar (NYSE:CAT) reported its Q4 profits which increased 44% to $1 billion, or $1.54 a share, from $697 million, or $1.04 a share, a year earlier. Revenue fell to $14.40 billion, from $16.08 billion a year earlier. The report by the construction equipment maker was better than analyst expectations of a profit of $1.27 a share on revenue of $13.41 billion.

The company said that sales were hit by a decline in mining sales during 2013, but maintained strong cash flow through cost cutting. Going forward, the manufacturer expects adjusted earnings of $5.30 per share in 2014, or $5.85 when restructuring costs are excluded. The company also announced that it would buy back about $1.7 billion in common stock during the quarter, and $10 billion by the end of 2018.

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