Poor Caterpillar earnings throw cold water on the Trump rally

Caterpillar released earnings Thursday, missing analysts' revenue expectations and reducing its outlook for profits in 2017. The firm's struggles call into question investor enthusiasm for the U.S. economy following the election.

During a call with analysts, CEO Jim Umpleby said that slow growth in places like Brazil and China cut into profits last year, and that he doesn't expect any returns from U.S. infrastructure spending until at least 2018. As a net exporter, the firm is optimistic about border adjusted tax reform, though a projected stronger dollar would mitigate the effects.

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Data: Money.net; Chart: Andrew Witherspoon / Axios

Ronnie Moas of Standpoint Research placed a sell rating on the stock, arguing its rise in recent months puts too much faith in the Trump Administration's ability to execute priorities, without factoring in a backlash from trading partners.

Economic risk abounds: A delay or watering down of infrastructure spending, a hastening of the decline in China's economy, or the escalation of trade could hit American profits and deflate investor optimism.