Wall Street hits new highs as Trump speech reignites rally
The Dow breached the 21,000 mark for the first time ever on Wednesday, while the S&P and the Nasdaq hit record intraday highs, as President Donald Trump’s measured tone in his first speech to Congress lifted investor optimism.
Trump on Tuesday said he wanted to boost the US economy with a “massive” tax relief and make a $1-trillion effort on infrastructure, themes that have helped Wall Street scale new records since the November elections.
“Trump came off very Presidential and investors are drawing optimism from the way he delivered the message in his speech,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
“Today is just another vote of confidence in Donald Trump being able to do what he says he wants to do.” Financials and industrial stocks, which have benefited the most in the postelection rally, were the biggest gainers on Wednesday. The spike also helped the S&P to break out from the tight trading range the index has been stuck in since December 7.
The S&P financial index soared 2.5 per cent, far outperforming the other 10 major sectors, also helped by key Federal Reserve officials who stoked the possibility of an interest rate hike this month.
The KBW Nasdaq Bank index was up nearly 3 per cent, while the dollar gained 0.6 percent. The odds of March rate hike rose after the Commerce Department reported that January inflation ticked up by the most in four years.
Traders have now priced in a nearly 70 per cent chance of rate hike when the Fed’s policy-setting body meets on March 1415, according to Thomson Reuters data. Gold prices, the CBOE Volatility index and bond proxy sectors of the S&P 500 dropped.
“The specter of higher rates means the economy is doing better,” Bakhos said.
At 11:02 am ET the Dow Jones Industrial Average was up 238.4 points, or 1.15 per cent, at 21,050.64. The S&P 500 was up 24.88 points, or 1.05 per cent, at 2,388.52 and the Nasdaq Composite was up 56.17 points, or 0.96 per cent, at 5,881.61.
Five of the 11 major S&P sectors, including industrials and materials gained more than 1 per cent. Lowe’s stock jumped 9.3 per cent to $81.22 and was the biggest percentage gainer on the S&P.