Dow Jones Industrial Average recovers balance on Thursday

• The Dow Jones rallied 200 points on Thursday as investors recover footing.
• US data came in broadly better than expected, easing recession fears.
• Despite a litany of Fed speakers, almost none addressed monetary policy.

The Dow Jones Industrial Average rebounded around 200 points on Thursday, with investors reinvigorated after US economic data eased rising fears of an economic slowdown. A better-than-expected Durable Goods Orders print has assuaged fears that the Federal Reserve (Fed) might have aggressively cut rates last week in response to a deteriorating economic outlook. However, investors will still be keeping a close eye on monthly jobs report figures in the coming weeks.

US Durable Goods Orders held flat at 0.0% in August, well below the previous month's revised 9.9%, but still beat the forecast of a 2.6% contraction. Initial Jobless Claims for the week ended September 20 also beat forecasts, printing at 218K versus the expected 225K and easing down from the previous week's revised 222K.

The recent 50 bps rate cut by the Federal Reserve (Fed) has caused some concerns in global markets. Some investors are worried that the large rate cut might be a response to a potential economic slowdown in the US. However, Fed Chair Jerome Powell stated last week that the rate cut was not a hasty reaction to signs of a recession, but rather a proactive measure to support the US labor market.

US Durable Goods Orders and week-on-week Initial Jobless Claims helped to bolster the Fed head's case, with both figures printing better than expected and the "soft landing" economic rhetoric holding steady. However, Friday's Personal Consumption Expenditure (PCE) inflation print will draw plenty of attention, and will be the real test of last week's Fed rate cut.

Dow Jones news

The Dow Jones is tilted firmly into the bullish side on Thursday, with over two-thirds of the equity index firmly planted in the green. Caterpillar (CAT) is trading firmly higher on the day, rising 3.3% near $391 per share following reports that China has unveiled another massive stimulus package meant to reinvigorate the Chinese housing and construction industries, a move that Caterpillar is widely expected to benefit from.

Dow Jones price forecast

Despite Thursday’s bullish tilt, the Dow Jones is struggling to make headway after the midweek’s bearish pullback. Still, price action is within arm’s reach of recent all-time highs, and bidders will have their sights set on the next leg up.

Dow Jones buyers have stubbornly staked their claim on the 42,000 handle, shrugging off signs of overbought conditions. On the low side, sellers will be looking to drag the equity board back down toward the 50-day Exponential Moving Average (EMA) near 40,870.

Dow Jones daily chart