- Markets Insider
The Dow Jones industrial average zoomed past the 21,000 mark for the first time on Wednesday as stocks resumed their record-setting rally.
Stocks gained as a more measured tone in President Donald Trump’s speech reassured investors, while bank stocks gained on higher chances of an interest rate hike this month.
In his first address to a joint session of Congress late Tuesday, Trump said he wanted to boost the U.S. economy with a “massive” tax relief, make a $1 trillion effort on infrastructure and overhaul Obamacare.
His comments, though lacking in detail, helped underscore his pro-growth stance that has pushed Wall Street to record highs in a post-election rally.
However, the markets were more focused on comments on Tuesday from a handful of Federal Reserve officials, including the influential New York Fed President William Dudley, who said the case for tightening monetary policy had become “a lot more compelling”.
“The markets are trading higher on the softer approach by the President,” Peter Cardillo, chief market economist at First Standard Financial wrote in a note.
“The dollar and yields are moving higher as next theme of the market, the ‘Fed’ overrides the Trump effect.”
The probability of a March rate hike jumped to 67.5 percent from roughly 30 percent, according to Thomson Reuters data, following the comments from Fed officials. The central bank’s policy-setting body meets on March 14-15.
The dollar jumped 0.79 percent to mark its biggest one-day gain since Dec. 15, while shares of Bank of America, Goldman Sachs and Citigroup rose about 2 percent in premarket trading.
Yellen, who has said a rate increase could happen in an upcoming meeting, is scheduled to speak on Friday. Meanwhile, investors will closely watch Fed Board Governor Lael Brainard’s comments on Wednesday for her take on rates.
A report from the Commerce Department showed U.S. consumer spending rose less than expected in January, while inflation pushed higher.
The Dow was up 195 points, or 0.94%, to 21,007.96 at 9:39 a.m. ET. The S&P 500 was up 19 points (0.85%) and the Nasdaq was up 47 points (0.83%.)
The Dow broke its 12-day record streak on Tuesday as retail stocks declined and investors remained cautious ahead of Trump’s late evening speech.
Among stocks, Lowe’s jumped 5.7 percent to $78.58 after the home improvement chain issued an upbeat sales forecast for the year.
Mylan rose 7.4 percent as the generic drugmaker reported a 31 percent jump in quarterly revenue.
Cybersecurity firm Palo Alto tumbled 21 percent to $120 as its current-quarter revenue and profit forecasts missed analysts’ estimates.
(Reuters reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)