Equity markets turn up on Trump address
LONDON - The U.S. dollar jumped and short-term U.S. Treasury yields hit the highest since 2009 on Wednesday, as investors focused on growing chances of a U.S. interest rate hike this month, rather than on U.S. President Donald Trump's first speech to Congress.
U.S. stocks hit record intraday highs on Wednesday, with the Dow breaching the 21,000 mark for the first time ever, as bank stocks surged on higher chances of an interest rate hike this month, while a more measured tone in President Donald Trump's speech reassured investors.
The Dow blasted through the 21,000 mark for the first time on Wednesday after Trump's measured tone in his first speech to Congress lifted optimism and investors viewed a looming interest rate hike as a glass half full.
The Dow Jones Industrial Average rose 303.31 points, or 1.46 per cent, to 21,115.55, the S&P 500 gained 32.31 points, or 1.37 per cent, to 2,395.95 and the Nasdaq Composite added 78.59 points, or 1.35 per cent, to 5,904.03.
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 per cent from roughly 30 per cent after the comments from Fed officials, according to Thomson Reuters data. The central bank's policy-setting body meets on March 14-15.
The dollar jumped 0.79 per cent to mark its biggest one-day gain since Dec. 15, while gold prices fell.
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.
The Dow Jones Industrial Average jumped 1.46 per cent to end at 21,115.55, while the S&P 500 rallied 1.37 percent to 2,395.96. The Nasdaq Composite climbed 1.35 percent to 5,904.03.
Seven of the 11 major S&P sectors gained more than 1 per cent, including energy, up 2.05 per cent.
About 8.1 billion shares changed hands on U.S. exchanges, the most in 2017 and well above the 6.9 billion daily average for the past 20 trading days, according to Thomson Reuters data.
On Thursday, all eyes will be on the trading debut of Snap Inc, owner of popular messaging app Snapchat.
Despite having never turned a profit, Snap on Wednesday raised US$3.4 billion in an initial public offering, giving it a valuation of US$24 billion. That is the richest valuation in a U.S. tech IPO since Facebook (FB.O) in 2012.
During Wednesday's session, Lowe's (LOW.N) jumped 9.5 per cent after the home improvement chain issued an upbeat sales forecast.
While corporate earnings have improved recently, stock valuations remain unusually high. The S&P 500 is trading near 18 times expected earnings, compared to its 10-year average of 14, according to Thomson Reuters Datastream.
Advancing issues outnumbered declining ones on the NYSE by a 2.08-to-1 ratio; on Nasdaq, a 3.05-to-1 ratio favored advancers.
The S&P 500 posted 140 new 52-week highs and five new lows; the Nasdaq Composite recorded 218 new highs and 38 new lows.