BREAKING: Market Feels Powell's 'Pain'

A positive chart pattern named such because it resembles the outline of a coffee cup with a handle. The pattern can last from seven weeks to as long as a year, but most are three to six months.

Steel Dynamics (STLD) is Wednesday's IBD Stock Of The Day as the steel price outlook takes a turn for the better. STLD stock joined in a group-wide rally, flashing an early entry and flirting with an official breakout.

Steel stocks have solidly outperformed the S&P 500 over the past seven weeks amid optimism that the Federal Reserve can engineer a soft landing for the U.S. economy. That thesis got a bit of a boost from Thursday's Q2 GDP, which slipped a revised 0.6%, better than the initially reported 0.9%. Personal consumption expenditures rose 1.5% in the quarter, revised up from 1%, suggesting a resilient consumer.

Plus, gross domestic income, an alternate measure of growth, rose 1.4% in the quarter. Some economists like to average GDP and GDI when there's a big divergence. That method shows the U.S. economy grew a modest 0.4% in Q2.

The macro story seemed to provide a lift on Thursday, with copper and aluminum stocks rising in tandem with steel stocks. However, steel-specific factors also are behind the group's recent outperformance.

Just after 3 p.m. ET on Wednesday, Cleveland-Cliffs (CLF) announced a price increase of at least $75 per ton for carbon steel products.

BMO Capital Markets analyst David Gagliano noted on Tuesday that "the pace of (steel) price declines has slowed in the past month, with some forward-looking signs of stability continuing to emerge."

The improved near-term backdrop includes "upcoming domestic U.S. supply outages in Sept.-Nov." Gagliano also cited "expectations for U.S. scrap prices to be flat to up in September."

Still, Gagliano noted, with additional supply "still forthcoming, macro-demand headwinds remaining, and global sheet prices declining recently, we maintain our view that U.S. spot sheet prices are more likely to stabilize, rather than rebound," this fall.

While posting record quarterly earnings on July 20, Steel Dynamics CEO Mark Millett highlighted "near-record order backlogs."

STLD stock moved above an 86.04 buy point from a cup-with-handle base. Steel Dynamics stock rallied 6.6% to 86.76.

Shares were already actionable Thursday from breaking a downtrend in the handle and continuing a rebound from the 21-day moving average.

Volume was well above average, snapping several weeks of quiet trading.

With Thursday's move, STLD stock joined the IBD Leaderboard and SwingTrader portfolios.

STLD stock is rated No. 1 in the Steel-Producers group, based on a combination of fundamental and technical criteria, according to IBD Stock Checkup.

Cleveland-Cliffs stock helped lead the steel stock rally on Thursday, following its price increase announcement. CLF popped 6.3% to 19.39, but it remains deep within a consolidation, well below its 200-day moving average.

Commercial Metals (CMC) rose 2.5% to 43.59, reclaiming a 42.99 buy point from a double-bottom base, as well as breaking the downtrend in a handle with a 44.45 entry. CMC is part of the flagship IBD 50 list of leading stocks.

Nucor (NUE) climbed 4.4% to 144.21, also rallying above its 21-day line. NUE stock is near a 146 handle buy point, but broke a handle downtrend as well.

But unlike STLD stock, Commercial Metals and Nucor volume was well below average.

Meanwhile, the SPDR S&P Metals and Mining ETF (XME) rose 2.6% to 53.45, edging above a handle entry that is a bit lower in XME's consolidation than optimal. The XME ETF goes well beyond steel, with top holdings recently including gold, aluminum and coal.

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