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
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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.
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)
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
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