Investopedia Markets News (all except PF)

• UPS reported quarterly results that topped Wall Street expectations on the top and bottom lines.
• The shipping giant's cost-cutting measures—the company said it has cut nearly 50,000 jobs this year—helped boost profits.

United Parcel Service's turnaround plan seems to be working.

UPS (UPS) shares were up 7% recently, trading at their highest levels in three months, after the shipping giant reported better-than-expected third-quarter results.

The Atlanta-based firm reported adjusted earnings of $1.74 per share on revenue that fell 3.7% year-over-year to $21.42 billion. Analysts surveyed by Visible Alpha had expected adjusted EPS of $1.31 and revenue to fall further to $20.89 billion.

UPS handily topped Wall Street's earnings expectations and outlined progress on its “Efficiency Reimagined” initiative—designed to streamline operations, reduce its workforce, and close underused facilities. UPS issued guidance for the fourth quarter after not doing so last quarter amid economic uncertainty, indicating executives now believe the company is on firmer footing.

"We launched our Efficiency Reimagined initiatives to undertake the end-to-end process redesign effort which will align our organizational processes to the network reconfiguration," UPS said. "We have reduced our operational workforce by approximately 34,000 positions and closed daily operations at 93 leased and owned buildings during the first nine months of 2025 as a component of this initiative." The company also said it has shed 14,000 white collar positions this year.

UPS's moves are more aggressive than those outlined by the company in April, when it said it planned to cut roughly 20,000 employees from its operational workforce and close about 70 facilities this year. UPS said Tuesday that it has achieved cost savings so far this year of about $2.2 billion as a result of its initiatives, and expects to finish 2025 with savings of $3.5 billion compared with the year before.

UPS, which last quarter did not provide a revenue or profit forecast "given the current macro-economic uncertainty," guided for $24 billion in fourth-quarter revenue, a tick above Visible Alpha consensus. 

It reinstated its full-year outlook in September, expecting 4% to 6% revenue growth this fiscal year, and said it plans to spin off its freight business by June 2026.

Shares of UPS entered Tuesday down nearly 30% this year.

• Two new companies, both created by spinoffs, are set to join the benchmark S&P 500 in the coming days.
• Those companies are Solstice Advance Materials and Qnity Electronics, which are set to be the first changes since September.

More changes are coming to a big U.S. index.

Two companies are coming to the S&P 500, the benchmark U.S. market measure. Solstice Advance Materials is set to replace CarMax (KMX) before Friday's open, S&P Dow Jones Indices said late Monday, while Qnity Electronics will replace Eastman Chemical (EMN) before the start of trading next Tuesday.

Solstice, which will use the ticker "SOLS," is arriving via spinoff from Honeywell International (HON) in a deal expected to close Thursday, with the latter company set to remain in the index. Qnity, which will get the one-letter symbol "Q," is itself a spinoff from another S&P 500 member, DuPont de Nemours (DD), which will also remain an index member; that deal is expect to be completed Monday.

The S&P 500 index is considered the benchmark measure of U.S. markets—and it's tracked by widely held investment products. The index is periodically updated, with the next round of changes reflecting spinoffs by two big companies that mark the first adjustments to the index since September.

CarMax and Eastman will move to the S&P 600 index of smaller companies.

The changes will mark the first updates to the S&P 500's membership since September, when Robinhood Markets (HOOD), AppLovin (APP) and Emcor (EME) replaced Caesars Entertainment (CZR), MarketAxess Holdings (MKTX) and Enphase Energy (ENPH).

Honeywell will remain part of the Dow Jones Industrial Average after the Solstice spinoff, S&P Dow Jones Indices said; Solstice will not join that index. That index's composition hasn't changed since early November 2024, when Nvidia (NVDA) and Sherwin-Williams (SHW) replaced Intel (INTC) and Dow (DOW).

• PayPal's stock took off after the payment processor announced it was partnering with OpenAI on facilitating transactions within ChatGPT.
• Meanwhile, PayPal reported better third-quarter results than expected and increased its outlook for the fiscal year.

PayPal shares shot higher Tuesday after the company announced a partnership with ChatGPT operator OpenAI and released strong third-quarter results.

PayPal Holdings (PYPL) will extend its services to ChatGPT users, bringing the number of AI chat operators it's helping handle e-commerce transactions to at least three. Those shopping via ChatGPT will be able to tap into PayPal's consumer protection service, while merchants will be able to access PayPal's payment processing tools, PayPal announced Tuesday.

PayPal's alliance with OpenAI comes after established retailers, such as Walmart (WMT) and Etsy (ETSY), announced plans to sell to ChatGPT users. The partnerships are expected to bolster consumer trust in shopping via ChatGPT, analysts said.

"Hundreds of millions of people turn to ChatGPT each week for help with everyday tasks, including finding products they love, and over 400 million use PayPal to shop," PayPal CEO Alex Chriss said in a statement. He said the partnership will "help people go from chat to checkout in just a few taps for our joint customer bases."

Shares of PayPal were recently up some 8%, though they remain in the red year-to-date.

Americans, particularly younger ones, are using ChatGPT to shop, and are growing more confident that doing so is safe and secure. Others may begin to trust so-called agentic commerce as they hear about these shoppers' experiences and see that businesses like PayPal are partnering with ChatGPT.

PayPal is working with other AI chat operators, including Perplexity and Alphabet's (GOOG, GOOGL) Google, and allowing merchants to tap into their various chat systems by integrating their system once with PayPal, Chriss said Tuesday.

“We've got actually quite good scale and ubiquity across the ecosystem," he sad on a conference call, according to a transcript made available by AlphaSense. "So [we’re] very well-positioned to win as Agentic Commerce continues to evolve."

Other consumer goods companies described agentic commerce as an opportunity while briefing investors. Procter & Gamble (PG) believes the technology “opens up new possibilities for brands to make themselves visible,” CEO Andrew Schulten said on a conference call last week. Furniture marketplace Wayfair (W) is working to ensure its inventory is fully and accurately represented on Google, ChatGPT and Perplexity, Chief Technology Officer Fiona Tan said Tuesday.

PayPal also released strong third-quarter numbers and raised its earnings outlook for the fiscal year. The company reported a 7% year-over-year increase in revenue to $8.4 billion—exceeding the $8.2 billion analysts were expecting, according to consensus analyst estimates compiled by Visible Alpha. That amounted to $1.34 in adjusted earnings per share, beating the $1.20 consensus estimate from Visible Alpha.

This article has been updated since it was first published to update share-price information and add the comments from Schulten and Tan.

• The Federal Reserve is expected to cut interest rates to a range of 3.75%–4%, but officials remain divided and cautious amid unclear economic data.
• Analysts anticipate the Fed will soon end its quantitative tightening program, possibly by December, as liquidity tightens.

The Federal Reserve is expected to cut interest rates Wednesday, but analysts are focused on its view of the economy’s prospects as the government shutdown clouds the outlook.

When the Fed last met in mid-September, the federal government was open, the job market was showing some cracks and inflation was moving up slightly but within reason. 

The overall picture hasn’t changed too much, analysts say, despite noting the shutdown is dampening growth as it stretches into its 28th day. A lack of government data is also making the economy trickier to read, so investors will be watching for the Fed’s sense of where conditions stand.

The group is scheduled to release a statement with their decisions at the close of their meeting on Wednesday at 2 p.m. Eastern Time. Federal Reserve Chair Jerome Powell will then provide more details and answer questions at a press conference at 2:30 p.m.

However, the central bank may not be too willing to share whether it plans to follow up Wednesday’s rate cut with several more reductions. 

“We expect limited signals about the policy path ahead,” wrote Matthew Luzzetti, chief U.S. economist at Deutsche Bank, adding that Fed Chair Jerome Powell is “likely to keep options open and not pre-commit to a particular action through year-end.”

Fed rate cuts can directly affect borrowing costs, savings returns, and overall economic stability—impacting everything from mortgage rates to job security.

The Fed’s expected cut would lower the federal funds rate by 25 basis points to a target range of 3.75% to 4%, a back-to-back reduction after September’s action. Markets expect several more cuts, though Fed officials haven’t signaled an aggressive path ahead.

If the Fed has been non-committal, it’s partly because Fed officials are divided. Inflation is higher than the Fed might like, prompting some policymakers to support a more cautious stance toward rate cuts.

The economy is also encountering a “conundrum,” with strong consumer spending boosting growth yet the job market faltering somewhat, Bank of America economist Aditya Bhave wrote in a note to clients. Or at least it was back in August, when the most recent official jobs report was released—the shutdown has meant the September report hasn’t arrived.

The cracks in August had prompted Fed officials to cut rates last month. The fog that the shutdown has put on economic data likely means the Fed’s message “can’t change meaningfully,” Bhave wrote.

“Don't change course when flying blind,” Bhave wrote. 

It’s very likely that one Fed official will want to cut rates more aggressively: Fed Governor Stephen Miran. He was previously a top White House economist and has aligned with President Donald Trump’s position that aggressive cuts are necessary.

Miran, in his first meeting, voted against September’s 25 basis point rate cut, arguing it should have been double that amount. He’s signaled he will do so again.

“My view is that it should be 50,” Miran told Fox Business this month.

At least one other Fed official may vote against the decision—but arguing that the Fed should keep rates flat instead.

There are “meaningful risks of at least one hawkish dissent,” wrote Bhave, of Bank of America.

One such dissenter could be Kansas City Fed President Jeffrey Schmid, who recently noted inflation “remains too high.” Chicago Fed President Austan Goolsbee is another candidate, Bhave wrote, noting he’s recently put himself in the “cautious” camp.

"Let’s be a little wary about frontloading all the rate cuts before we know that inflation’s going to go back down to 2%,” Goolsbee told the Financial Times.

St. Louis Fed President Alberto Musalem, meanwhile, has said he’s “open-minded.” Fed Governor Michael Barr has also called for a “cautious approach,” though Bank of America says he may ultimately vote with the majority since Fed governors don’t tend to dissent from rate decisions.

That debate is a sign from Fed officials that “rate cuts past October are not guaranteed,” Wells Fargo economist Sarah House wrote in a research note.

So is a speech this month from Fed Governor Christopher Waller, who had been out in front arguing for cutting rates months ago. Waller, whom Trump has considered for the Fed chair position, recently said he supports another 25 basis point cut in this week’s meeting. 

“But beyond that point, I will be looking for how the solid GDP data reconcile with the softening labor market,” he said. 

Markets seem to expect more Fed cuts ahead. Investors see an over 87% probability that the Fed will cut rates once more in December, according to the CME Group’s FedWatch tool, which uses prices from futures markets to determine probabilities for Fed policy.

While Friday’s inflation report gave a “green light” for the Fed to cut this week, market expectations “appear too aggressive for 2026,” Michael Pearce, deputy chief U.S. economist at Oxford Economics, wrote in a note to clients.

“As the downside risks to the economy fade, inflation risks will loom more heavily in their thinking next year, which we think will justify a more moderate pace of cuts,” he wrote.

Others see more risk that a weak job market will outweigh inflationary concerns. 

There is a “clear chance that the ‘low hire, low fire’ economy becomes a ‘no hire, let's fire’ story,” ING economist James Knightley wrote in a research note, referring to the current thinking that employers aren’t opting for layoffs but aren’t hiring either.

Some analysts expect the Fed to halt a program that’s slowly been draining excess money from the financial system. Others say the Fed could hold off until December.

It wouldn’t be a signal of the Fed’s view on the economy, Powell said this month. But it would spell the end of the Fed’s efforts to unwind the extraordinary support it offered to bond markets during the COVID pandemic.

Powell “cleared the path” for ending its quantitative tightening program with his speech, wrote Gennadiy Goldberg, head of U.S. rates strategy at TD Securities.

Bond markets nearly crumbled in March 2020, forcing the Fed to buy up a large amount of Treasury securities and mortgage-backed securities to help prevent a full-blown meltdown. The bond-buying program paved the way for ultra-low interest rates during the pandemic, fueling a spree of home purchases and refinancing. 

It meant, however, that the Fed’s balance sheet ballooned from just about $4 trillion in early 2020 to nearly $9 trillion by 2022.

The Fed has since been gradually unwinding that support by letting some of the bonds it has purchased mature without replacing them, essentially removing money from the system. The Fed’s assets are now below $6.6 trillion, though Powell suggested recently the economy’s growth means assets won’t return to pre-pandemic levels.

The trigger for ending QT is recent market movements in very short-term lending. The plumbing in the financial system is far from clogged, but it’s flowing a little less freely than it used to since the Fed has removed cash from the system. Some signs are starting to suggest “liquidity conditions are gradually tightening,” Powell said last month.

The Fed aims to ensure banks have “ample reserves,” thus preventing spikes in short-term interest rates that would emerge if banks need cash imminently. That is more or less what happened for a brief period in September 2019, when the Fed’s efforts to unwind its post-2008 bond purchases came to an abrupt end. 

To avoid similar strains, the Fed plans to stop its QT program when bank reserves are “somewhat above” the levels it deems “ample,” Powell said.

Analysts say that period is nearing.

“Bank reserves are closer to ample than abundant,” Bank of America’s Bhave wrote, and ending QT “would be a prudent move” even if that may not happen until December.

• Major U.S. equities indexes climbed to fresh intraday highs Tuesday in the wake of strong corporate earnings and as the Federal Reserve's two-day meeting kicked off. 
• United Parcel Service shares surged after the shipping giant posted strong quarterly results.
• Shares of Royal Caribbean Cruises dropped after the cruise operator's quarterly revenue missed analysts' expectations.

Major U.S. equities indexes climbed to fresh intraday highs Tuesday in the wake of strong corporate earnings and as the Federal Reserve's two-day meeting kicked off. The Dow Jones Industrial Average, Nasdaq, and S&P 500 all set fresh records for a third straight session.

PayPal (PYPL) stock soared after the company inked a deal with OpenAI to have its digital wallet embedded into ChatGPT for purchases.

United Parcel Service (UPS) shares surged after strong quarterly results as investors cheered the shipping giant's turnaround efforts.

Sherwin-Williams (SHW) was the best-performing stock in the Dow after the paint supplier delivered third-quarter earnings that topped analysts' estimates.

F5 (FFIV) shares sank on a soft outlook after the company said it "anticipates some near-term disruption to sales cycles as customers focus on assessing and remediating their environments" because of a recent cybersecurity incident.

Shares of Royal Caribbean Cruises (RCL) dropped after the cruise operator's quarterly revenue missed analysts' expectations.

CarMax (KMX) stock also slipped as S&P Dow Jones Indices said the company will be removed from the S&P 500 and move to the S&P SmallCap 600 prior to the opening of trading Friday.

Gold and oil futures fell. The yield on the 10-year Treasury note was little changed. The U.S. dollar slipped against the yen and euro, and rose against the pound. Major cryptocurrencies were mixed.

• UnitedHealth posted quarterly earnings that topped analysts' estimates and raised its 2025 outlook.
• The strong earnings come after a series of setbacks that sent the health insurer's stock tumbling earlier this year, including an investigation into its Medicare billing practices.

America's biggest insurer is showing some signs of improvement in the health of its business, after a series of setbacks.

UnitedHealth Group (UNH) posted adjusted earnings of $2.92 per share for the third quarter, above the $2.74 per share analysts surveyed by Visible Alpha had called for. Its revenue grew 12% year-over-year to $113.16 billion, in line with expectations. The company also raised its full-year outlook for adjusted earnings per share to at least $16.25, up from at least $16 previously.

Shares of UnitedHealth Group (UNH) surged Tuesday following the results before paring back early gains. They've lost about 28% of their value in 2025 so far.

UnitedHealth Group's better-than-expected earnings could point to more stability after a tough time earlier this year marked by changes in its leadership and enhanced regulatory scrutiny.

The improved outlook comes after a turbulent stretch for the company: It suspended its outlook and then-CEO Andrew Witty left abruptly in May, sending UnitedHealth shares tumbling. In early July, reports emerged that ex-employees and medical professionals had been interviewed by Department of Justice investigators over a probe into the insurer's Medicare billing practices, adding to investor concerns.

CEO Stephen Hemsley, who replaced Andrew Witty in May, said Tuesday that the company remains "focused on strengthening performance and positioning for durable and accelerating growth in 2026 and beyond, and our results this quarter reflect solid execution toward that goal."

Episode 266 of the Investopedia Express podcast with Caleb Silver (October 27, 2025)

Subscribe Now: Apple Podcasts / Spotify / PlayerFM 

A potential tariff truce between the U.S. and China has stocks hitting new highs around the world despite the ongoing government shutdown and a slowing labor market. The Fed may try to stem the slowdown when it meets this week on interest rates with all signs pointing towards another small cut.

Shannon Sacoccia of Neuberger Berman drops in with her playbook on how to play offense and defense in the fourth quarter, and what to expect in 2026. Plus, shares of Beyond Meat are getting grilled after soaring on the meme stock express last week. Is this just a silly stock move or yet another sign of frothiness across the market?

Links for show notes:

• https://www.investopedia.com/what-to-expect-in-markets-this-week-fed-interest-rate-deci[…]arnings-from-apple-microsoft-meta-amazon-alphabet-11835986
• https://www.nb.com/en/global/biographies/shannon-saccocia
  

• Gold's retreat from its recent record high accelerated on Tuesday, with profit-taking weighing on the precious metal after strong gains in recent months.
• The commodity's retracement coincides with the relative strength index recently dropping below its neutral threshold, signaling waning bullish momentum and raising the possibility of a deeper short-term pullback.
• Investors should watch critical support levels on gold's chart around $3,850, $3,720 and $3,450, while also monitoring a key overhead region near $4,380.

Gold's (XAUUSD) retreat from its recent record high accelerated on Tuesday, with profit-taking weighing on the precious metal after strong gains in recent months.

The spot price of gold slipped below the $3,900/oz level this morning as signs of a potential breakthrough in U.S.-China trade talks ahead of a meeting later this week between President Donald Trump and Chinese President Xi Jinping eased demand for the safe-haven asset. Gold's recent decline has coincided with a stock market rally that continues lifting major indexes to record highs.

The price of gold, recently at around $3,910, has fallen 11% from the record high set early last week, though is still about 50% higher year-to-date, boosted by economic uncertainties, geopolitical tensions, and purchases by central banks around the world.

Below, we break down the technicals on gold’s chart and identify key levels worth watching out for amid the volatile trading.

After hitting its all-time high on Oct. 20, gold has undergone a retracement, a move that coincides with the relative strength index recently dropping below its neutral threshold, signaling waning bullish momentum and raising the possibility of a deeper short-term pullback.

In early trading Tuesday, the precious metal fell below the 38.2% Fibonacci retracement level when applying a grid from the August low to October high.

Let’s identify three critical support levels to watch following Tuesday's breakdown below this area and also point out a key overhead region worth monitoring if the price resumes its longer-term bullish trend.

Further selling could see gold decline to around $3,850. This area, which closely aligns with the closely-followed 50% Fibonacci retracement level and 50-day moving average, may provide support near a brief consolidation period on the chart in early October.

The next lower level to watch sits at $3,720. A pullback to this area may attract support near the 61.8% Fibonacci retracement level and a cluster of trading activity that formed on the chart during the second half of September.

A deeper retracement in the precious metal opens the door for a retest of critcal support near $3,450. Investors may view this as a high probability accumulation area around a trendline that connects multiple prior peaks on the chart from April to July.

If gold resumes its longer-term uptrend, investors should keep a close eye on the $4,380 region. This area could provide key resistance near a series if prices situated just below the commodity’s record high. A sustained breakout above this level would signal renewed bullish momentum and potentially set the stage for fresh all-time highs.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

News of the day for Oct. 28, 2025

Stock futures are inching higher after major indexes closed at record highs yesterday amid optimism about trade talks between the U.S. and China; Amazon is eliminating 14,000 corporate positions; the Federal Reserve is scheduled to begin its two-day policy meeting, with investors expecting the central bank will cut interest rates; UnitedHealth shares are rising after the health insurer raised its full-year outlook; and UPS stock is surging following better-than-expected results from the shipping giant. Here's what you need to know today.

Stock futures are slightly higher this morning after major indexes hit record highs to start the week amid optimism that the U.S. and China would strike a trade deal during meetings later this week. Investors are digesting a barrage of earnings reports from major companies and preparing for a decision on interest rates from the Federal Reserve, which kicks off its two-day policy meeting today and is widely expected to trim its benchmark rate. Futures tied to the Dow Jones Industrial Average were up 0.4% recently, while those linked to the benchmark S&P 500 and the tech-focused Nasdaq added 0.1%. Gold prices were down 2% at $3,940 an ounce, trading at their lowest levels since early this month after hitting a record high of near $4,400 last week. The yield on the 10-year Treasury note, which can affect borrowing costs on all sorts of consumer loans, slipped to 3.98% at yesterday's close. Bitcoin ticked lower to $114,500.

Amazon (AMZN) will slash about 14,000 corporate roles, the company said in a blog post published Tuesday morning, citing advancements in artificial intelligence. “This generation of AI is the most transformative technology we’ve seen since the Internet, and it's enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones),” wrote Beth Galetti, Amazon’s senior vice president of people experience and technology. "We’re convicted that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business." News reports on Monday said Amazon was preparing to lay off 30,000 corporate employees.  Amazon is the nation’s second-largest employer, with more than 1.5 million staffers across the globe, mostly in warehouse positions. The company has around 350,000 corporate staffers. The layoffs come as Oracle, Microsoft, Alphabet, and other tech firms have announced workforce reductions.  Amazon shares were up less than 1% in premarket trading.

The Federal Reserve’s policy committee is scheduled to begin its two-day meeting today amid expectations it will vote to cut interest rates for the second time this year. Most analysts and investors expect the Federal Open Market Committee to reduce the federal funds rate by a quarter point to a range of 3.75% to 4%. Before cutting the key rate at its meeting last month, the Fed had kept rates elevated in an effort to drive down inflation, which has remained stubbornly above the central bank’s target of 2%. However, a weakening labor market has raised concerns among Fed officials, who believe that lower interest rates can help spur job creation. Investors are also expecting the FOMC to cut interest rates at its December meeting, according to the CME FedWatch tool. The FOMC will announce its decision at 2 p.m. ET on Wednesday, followed by a press conference with Fed Chair Jerome Powell.

UnitedHealth Group (UNH) shares are rising in premarket trading after the healthcare insurance provider reported better-than-expected earnings and raised its annual profit forecast. UnitedHealth said revenue in the third quarter rose 12% to $113.2 billion, just shy of analyst estimates compiled by Visible Alpha, while adjusted earnings per share were $2.92, topping estimates. The insurer also raised its 2025 full-year outlook to at least $16.25 per share. Shares of UnitedHealth Group, which through Monday's close had lost more than quarter of their value so far in 2025, rose about 5% ahead of the opening bell.

Shares of United Parcel Service (UPS) are soaring after the shipping giant reported strong third-quarter results and provided guidance for the fourth quarter. UPS reported third quarter revenue of $21.4 billion, ahead of the $20.9 billion that analysts tracked by Visible Alpha were expecting, while its adjusted earnings per share of $1.74 came in above expectations of $1.31. The company also projected $24 billion in fourth-quarter revenue and an adjusted operating margin of between 11% and 11.5%. The guidance comes after UPS pulled its full-year outlook amid uncertainty over tariffs. UPS shares, which were down nearly 30% since the start of the year coming into today's session, were up 12% in recent premarket trading.

• Caterpillar is expected to report third-quarter earnings before the market opens on Wednesday.
• As investors have come to see the shares as an AI play, the stock has been a top performer in 2025—leaving them "priced for perfection," according to Morgan Stanley.

A company known for its distinctive yellow construction equipment and its iconic logo has become an AI darling.

Yes, we mean Caterpillar (CAT)—which through Monday's close has the best-performing stock in the Dow, ahead of companies like Nvidia (NVDA) and Microsoft (MSFT), thanks to an AI-driven metamorphosis.

Caterpillar has lately seen stalling earnings growth in 2025, with its past two quarterly reports missing expectations. Still, its shares are up more than 45% year-to-date, more than the Industrial Select Sector SPDR Fund's (XLI) 18% gain, the S&P's 17%, and Nvidia's 38%. And when Caterpillar reports third-quarter earnings pre-market tomorrow morning, investors are likely to focus on a key driver of its future growth: data centers' surging demand for electricity.

That trend is shifting the spotlight to Caterpillar's energy and transportation segment from its construction and resources segments, which have been challenged. The latter—bulldozers, excavators, and mining trucks—will "take a backseat" as the former—backup and primary power generation sets, solar turbines, and gas pipelines—drives earnings in the coming years, according to BofA Global Research analysts, who have a "buy" rating on the stock.

The E&T segment accounts for roughly 40% of Caterpillar's sales, according to BofA. Businesses within the segment, including its power generation business, "continue to outgrow the overall business," Bank of America wrote in June. Last year, E&T chipped in about $29 billion of the company's roughly $65 billion in total sales, more than either of the construction and resources units.

Caterpillar's stock has been a beneficiary of investor penchant for AI-themed investments. Its next earnings report, due Wednesday morning, will be the latest opportunity for investors to determine whether the company's data center power-play narrative can endure.

Can the stock keep rising? Morgan Stanley analyst Angel Castillo recent said Caterpillar shares, sitting near all-time highs, were "priced for perfection." Wall Street analysts, on average, have a price target of about $497, 6% below Monday's close of $527.

More evidence of an oversupplied construction market and the firm's cautious views on non-residential construction activity, Castillo said, will put pressure on its construction segment. Without strength in other segments to offset that weakness, he said, there's the risk of negative earnings revisions.

Still, growth in E&T could be a potent mood booster. "Any amount of sequential growth is enough to keep sentiment positive," he wrote in a report last week. The firm has a bearish rating on the stock.