Dow Jones Industrial Average Tops 21.000 for First Time
The Dow Jones Industrial Average surged above 21,000 for the first time, as investors embraced optimism from President Donald Trump and Federal Reserve officials.
The blue-chip index was up about 230 points shortly after the opening bell, rising 1.1percent to 21,041. The S&P 500 rose 1percent and the Nasdaq Composite added 0.9percent, following gains in Asia and Europe.
Stocks have been soaring since Election Day, with the Dow industrials surpassing 19,000, 20,000 and now 21,000.
If the level holds through the closing bell, it will tie the fastest thousand-point jump in history: It took 24 sessions from the first close above 10,000 for the index to climb to 11,000 in 1999.
The latest milestone came after Mr. Trump struck an optimistic tone in a speech to Congress on Tuesday evening, although he offered few new details for his agenda. Investors were also focused on the likelihood of the Fed raising interest rates in March, following comments from a number of officials suggesting another quarter-point rate increase could come at the central banks next meeting.
Fed-fund futures, used by investors to place bets on central bank policy, showed a roughly 66 percent chance of a rate rise in March, up from 35percent Tuesday, according to CME Group.
U.S. government bonds weakened and the dollar jumped. The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was recently up 0.5percent. The yield on the benchmark 10-year Treasury note rose to 2.449percent, according to Tradeweb, from 2.358percent Tuesday. Yields rise as prices fall.
We didnt get a lot of new things out of President Trump, said Mark Haefele, chief investment officer at UBS Wealth Management. The market took its cues from the Federal Reserve. They view the economy as strong and are looking to hike rates this year.
New York Fed President William Dudley, a close ally of Fed Chairwoman Janet Yellen, on Tuesday said the case for raising rates has become a lot more compelling in light of the economys current and expected performance. San Francisco Fed President John Williams also said in a speech Tuesday that a rate increase at the central banks meeting in March was very much on the table for serious consideration.
Bank stocks surged. Financial shares in the S&P 500 rose 2.4percent, leading gains. Bank of America rose 3.4percent and Morgan Stanley added 2.9percent.
Higher interest rates tend to boost the profitability of banks lending activities.
The prospect of higher U.S. rates rippled across to Europe, pulling local government bond yields higher across the board.
The bond market doesnt look great over the next 12 to 18 months. It looks like the Fed is committed to a path of normalization, said Bob Michele, head of the global fixed income, currencies and commodities group at J.P. Morgan Asset Management. We see growth and inflationary pressures picking up globally.
In Asia, a weakening yen helped Japans Nikkei Stock Average close up 1.4percent. The dollar was recently up 0.9percent at 113.812, helping to lift japanese companies that sells goods abroad.
source: http://www.denverpost.com/2017/03/01/dow-jones-industrial-average-crosses-21000/
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