Caterpillar stock hit a record high Thursday — Here’s why

Key recommendations

• Caterpillar shares hit a record high on Thursday and are up more than 30% this year.

• Reports of fresh Chinese stimulus measures led to a broad market rally.

• Caterpillar will benefit from a rebound in China’s housing market, which has struggled in recent years.

Caterpillar (CAT) shares rose more than 3 percent to a record high on Thursday as reports of China’s fresh stimulus efforts led to a broader market rally.

The Chinese government said on Thursday it would institute “necessary fiscal spending” and stabilize the country’s struggling real estate sector, according to the state government. Xinhua News Agency. Bloomberg also reported that Beijing plans to inject about $140 billion into its biggest state lenders to prop up the economy.

Caterpillar shares rose 4% on Tuesday as China unveiled a massive monetary stimulus package to boost the economy.

Caterpillar could benefit from the rebound in China’s housing market

Caterpillar will benefit from the expansion in the real estate market in China. The construction equipment company is considered a benchmark stock as a proxy for domestic and global economic expansion or contraction.

Caterpillar shares recently rose 3.2% to $390.49, after previously hitting a record high of $397.22. The stock is up about 32% year to date.

Last month, the company reported lower-than-expected second-quarter revenue but slightly better-than-expected profit.

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