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The stock market has doubted the notion of an imminent recession for months.
And economists and corporate leaders are starting to meet investors on this side of the fence.
Industrial bellwether Caterpillar (CAT) on Tuesday saw its stock rise more than 8% after the company told investors it expects 2023 results "will now be even better than we described during our last earnings call."
Consider this just the latest report backing up why the Federal Reserve's staff economists no longer expect the economy to fall into recession this year.
In April, Caterpillar said it expected adjusted profit margins to be in the top half of its forecasted range. On Tuesday, the company said this metric is likely to be near the top end of its projected range of 18%-21% on the high end of the forecast.
When investors are looking at the finest slices of commentary for clues on how a business is faring, a move from the "top half" to the "top end" of a forecast is worth about $10 billion in market value.
Through its call on Tuesday, Caterpillar management played its assessment of the economy today and its view on the future fairly close to the vest.
Asked about its outlook for next year, CEO Jim Umpleby said, "As we look forward to next year, and you mentioned some of the dynamics that are going on, we're closely monitoring economic conditions, but we do feel good about the business. But as I'm sure you know, we're not going to make a '24 prediction at this point."
Pressed on its backlog of orders — seen as a leading indicator of future business given the firm nature of most of these commitments — Umpleby said: "We feel good about the quality of the backlog."
Caterpillar's results also came against the backdrop of more downbeat data from the manufacturing sector, with the Institute for Supply Management's manufacturing PMI showing activity in the sector contracted for the eighth straight month.
Although both pieces of information were new for investors, only one was a major market mover. And actions speak louder than words.
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