Wall Street hits new highs as banks soar on rate hike hopes
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.
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.
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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 KBW Nasdaq Bank index .BKX was up 2.2 percent, trading at its highest level since late 2007.
"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 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 percent 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.
At 9:34 a.m. ET (1434 GMT) the Dow Jones Industrial Average .DJI was up 198.2 points, or 0.95 percent, at 21,010.44, the S&P 500 .SPX was up 19.1 points, or 0.80 percent, at 2,382.74 and the Nasdaq Composite .IXIC was up 47.22 points, or 0.81 percent, at 5,872.66.
Among stocks, Lowe's (LOW.N) jumped 9 percent to $80.99 and was the biggest gainer on the S&P, after the home improvement chain issued an upbeat sales forecast for the year.
Mylan (MYL.O) rose 8 percent as the generic drugmaker reported a 31 percent jump in quarterly revenue.
One weak spot was Intel (INTC.O), which was down 0.9 percent and was the top drag on all three indexes after Bernstein downgraded the stock to "underperform" and cut its price target.
Advancing issues outnumbered decliners on the NYSE by 1,901 to 825. On the Nasdaq, 1,939 issues rose and 410 fell.
The S&P 500 index showed 85 new 52-week highs and one new lows, while the Nasdaq recorded 82 new highs and 11 new lows.
(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)