Caterpillar gains more than 3% thanks to China stimulus and Fed speakers

• Caterpillar shares rise 3.5% on Thursday.
• China says it is prepared to strongly stimulate the domestic economy.
• CAT hit an all-time high of $397.22 early in the session.
• Powell, Cook and Kashkari will speak Thursday.

Caterpillar (CAT) Stock They hit a new all-time high on Thursday, as the broader market rose ahead of Federal Reserve (Fed) Chairman Jerome Powell’s highly anticipated speech. Additionally, Fed speakers Lisa Cook and Neel Kashkari are also important.

The market is looking for more clues on the November 7 interest rate decision. The central bank has signaled 50 basis point cuts in the last two meetings this year, but the CME FedWatch tool offers a 51% chance of a 50 basis point cut in November before stabilizing at 25 basis points in December.

While the S&P 500 and NASDAQ are both somewhat off, the Dow Jones Industrial Average (DJIA) has advanced half a percentage point at the time of writing.

Caterpillar Stock News

Caterpillar stock is the top performer on the Dow Jones on Thursday, advancing 3.5% at the time of writing. This is partly due to China’s announcement on Wednesday that it would try to stimulate the economy, particularly in the real estate industry.

Caterpillar produces many pieces of equipment for the mining and construction industries that should see increased demand with a stimulus boost.

The Chinese government said it will ease lending rates through central bank policy and pledged to provide direct stimulus that should benefit major industries. China’s economy has been reeling since the Covid pandemic, and anemic government supports are now being replaced by much stronger strategies.

Chinese stocks have performed better this week than any other week in the last decade, and mainland Chinese stock markets have risen for eight consecutive sessions.

This is a sudden change in sentiment for Caterpillar. It was just last month that Hazeltree named CAT stock the sixth most shorted among its contemporaries for August.

Earlier this month, Oppenheimer named Caterpillar stock as one of the most likely to benefit from a Republican Party sweep in the November US election season.

Caterpillar Stock Chart

Caterpillar shares hit an all-time high of $397.22 at the start of Thursday. This is just below the $400 psychological level, and that is where the bulls will try to push next.

Caterpillar has a forward price-to-earnings ratio of just 17, so the industrial company’s stock has the ability to advance without much resistance.

Until this week, CAT stock was stuck below the $362 to $369 supply zone, as well as this spring’s resistance near $381. With both resistance points behind it, CAT could spiral higher. Adding the distance between $369 and the August 5 low of $307 to $369 gives us a price target of $431.

Support lies well below the $340 and $330 50-day, 100-day, and 200-day simple moving averages (SMA).

CAT Stock Daily Chart