Industrial giants Honeywell International (HON) and Caterpillar (CAT), along with energy powerhouse Chevron (CVX), demonstrated significant gains in January, emerging as top performers in the Dow Jones Industrial Average.
Honeywell led the charge with a remarkable 16.6% increase, marking its most successful month since October 2022. A late-month surge of approximately 5% followed the company’s encouraging fourth-quarter earnings and optimistic outlook. This transformation is notable as Honeywell prepares to split into three distinct entities, having already spun off Solstice Advanced Materials and planning to separate its aerospace division later this year. This strategic realignment positions Honeywell as a focused automation player. Investors are also eyeing its majority-owned quantum computing venture, which is gearing up for an initial public offering, adding another layer of excitement to its prospects. The stock is currently targeting a breakout above a key level of 227.74.
Caterpillar, too, enjoyed a robust month, with shares rising nearly 15%. The company has been buoyed by strong demand in its core construction and mining segments, supported by a substantial $51 billion order backlog. Notably, generator sales for data centers have become a significant growth catalyst, bolstering its power and energy division, which now constitutes nearly half of total sales. Despite facing $2.6 billion in tariff impacts, analysts remain optimistic about Caterpillar’s trajectory as market conditions continue to favor recovery.
Chevron’s stock climbed 16.1%, buoyed by external geopolitical developments. The unexpected capture of Venezuelan leader Nicolás Maduro has positioned Chevron uniquely, being the last major U.S. oil player in the country. Their capacity to potentially boost Venezuelan oil production by 50% over the next one to two years has captured investor interest, further driving the stock’s performance. Chevron’s recent dividend increase of 4% also reflects the company’s commitment to shareholder returns amid fluctuating earnings.
In contrast, tech stocks in the Dow faced headwinds last month. Salesforce experienced a notable decline of nearly 20%, under pressure from competition in the artificial intelligence space, particularly following OpenAI’s advancements. Microsoft fell 11%, erasing gains from the month prior after a disappointing guidance update, while Apple shared minor losses despite solid earnings due to supply chain challenges related to record iPhone sales. Financial stocks faced similar struggles, with Visa and American Express experiencing declines in response to potential regulatory changes proposed by the White House, including caps on credit card interest rates.
Overall, while January proved beneficial for certain industrial and energy stocks, the technology and financial sectors are navigating a more turbulent landscape filled with challenges and headwinds.
