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Dow Jones Likely to Follow Manufacturers in Thursday Trading

Dow Jones Likely to Follow Manufacturers in Thursday Trading

Peter Hanks, Strategist

Stock Market Talking Points:

  • US durable goods orders are due Thursday morning along with manufacturing and housing data
  • The data is particularly important for the outlook of heavy machinery manufacturers like Caterpillar
  • Industrials comprise a significant portion of the Dow Jones index and may dictate overall performance

See how IG clients are positioned on the Dow, Crude oil and the US Dollar with our free IG Client Sentiment Data.

Industrial giant Caterpillar will likely lead the charge in Thursday’s trading session as US data on durable goods orders and manufacturing is released. The company accounts for roughly 3.5% of the index. As a whole, the industrial sector makes up nearly 24% of the Dow which places great significance on the data due on Thursday morning. Furthermore, the data will provide insight on the overall health of the US economy which has been questioned in recent months.

Dow Jones Likely to Follow Manufacturers in Thursday Trading

As for Caterpillar specifically, the heavy equipment manufacturer has had a mixed quarter. After an earnings miss, Caterpillar dragged the Dow Jones lower. The report highlighted headwinds for its China operations but today offered fresh remarks on their outlook. Chinese demand is “very strong” in 2019 the company said and announced plans to increase prices to offset inflation.

Caterpillar Price Chart: Daily Time Frame (January 2018 - February 20 2019) (Chart 1)

Dow Jones price chart

Caterpillar (CAT) Overlaid with the Dow Jones in Red and Ratio of CAT to Dow Jones in Purple

The statements propelled CAT to session highs and could shed light on the depth of China’s economic slowdown. Should the US data impress tomorrow, Caterpillar should be poised for another solid day and could drag the Dow Jones with it.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: Fed Minutes Offer Light on Dovish Shift, US Dollar Climbs

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