By CCN.com: The Dow Jones bounced back into recovery mode on Thursday, regaining its momentum from an initial breakout above 26,000 last Friday.

Heading into the afternoon session, the Dow had gained 53.54 points or 0.21 percent to trade at 26,058.37, and analysts say that there are ample reasons for it to continue to grind higher.

Fed Will Cut Interest Rates Even Though Economy is Booming

According to The Wall Street Journal, a growing number of economists expect the Federal Reserve to lower the benchmark interest rate as geopolitical risks intensify as a result of the trade war between the U.S. and China.

That rate cut is a near-certainty – even if the U.S. economy is secretly enjoying the fruits of a hidden economic boom.

With nearly half of the economists surveyed by The Wall Journal expecting the Fed to initiate a rate cut by July, the general sentiment amongst both strategists and investors is that a rate cut is imminent in the near term.

A rate cut on its own is likely to positively affect the U.S. stock market and relieve some of the pressure absorbed by key industries such as agriculture and manufacturing.

If the Fed moves forward with a rate cut by the third quarter of 2019, the timing of it may further improve the momentum of the Dow Jones and the rest of the U.S. equities market. That’s true despite the fact that many economists consider the U.S. economy to be in a good place, sluggish GDP figures notwithstanding.

“While the economy is in a good place,” the Fed is expected to move forward with easing the monetary policy by fall anyway, said Gregory Daco, Oxford Economics’ chief economist.

Billionaire Investor: GDP Hides Historic Economic Growth

Job numbers remain strong, and billionaire investor Stanley Druckenmiller says that the U.S. economy is secretly enjoying one of the largest productivity booms in recent history.

“I think we’re in one of the biggest productivity inflection booms since the late 1800s. I am very confident that it is not being measured in real GDP,” said Druckenmiller.

A potential Fed rate cut, combined with sneakily-robust economic growth, could act as a major catalyst for the short-term trend of the Dow Jones and the U.S. stock market.

But will it be enough to offset losses from the trade war?

Will Trade War Gloom Sap That Hidden Growth?

At the Luijiazui Forum 2019, China’s Vice Premier Liu He stated that external pressure motivates the country to build stronger domestic capital markets and better industrial supply chains.

Although China, along with other regions like the eurozone, has struggled in recent months due to the uncertainty in the global economy, Liu told economists to dismiss monthly economic indicators and focus on the market’s long-term trend.

Hu Xijin, the editor-in-chief of the Chinese and English editions of the Global Times, warned that China would refuse to back down from U.S. pressure in negotiations, even if it means absorbing new tariffs.

“As far as I know, China’s state media will publish more heavyweight commentaries criticizing the US & demonstrating China’s determination. It’s rare to see scathing attacks against the US in state media. This shows Beijing is preparing for China-US ties getting further worsening,” said Xijin.

Hence, while the prospect of a speedy Fed rate cut has led many investors and strategists to anticipate the recovery of the U.S. market, analysts fear that a comprehensive deal between the U.S. and China remains far away.