3Q26 Preview: Like It Or Not, DCs Driving Demand; Cost Pressures Rising

J.P. Morgan's 3Q26 preview for the Machinery/Waste Services sector notes that heading into the 3Q26 earnings season, demand outside data center-linked end markets remains mixed, but one theme is consistent: cost inflation. North American non-residential construction demand remains strong with data center spending re-accelerating; ag equipment demand remains weak but there is hope of revival after the recent run-up in crop/grain prices; truck demand remains in limbo amid record diesel prices and regulatory noise; waste services volumes remain weak with healthy pricing; and consumer-linked end markets are bracing for a slowdown. North American steel plate spot prices are up ~20% YTD, the WCI Composite Container Freight Index is up ~29%, U.S. diesel is up ~39%, and the bank prime loan rate is near ~7%. Better-than-feared names include MIDD and ESAB; WAB, URI and HRI are guidance-raising candidates; OSK and TEX are guidance-cutting candidates;