Dow passes 21,000, dollar jumps as rate hike looms

THE DOW Jones Industrial Average rose past 21,000 for the first time on Wednesday. / BLOOMBERG NEWS PHOTO
THE DOW Jones Industrial Average rose past 21,000 for the first time on Wednesday. / BLOOMBERG NEWS PHOTO

NEW YORK – The Dow Jones Industrial Average rose past 21,000 for the first time, the dollar jumped the most in six weeks and Treasuries fell as investors grew increasingly confident global economic growth is accelerating, clearing the path for higher interest rates in America.

Major lenders led gains among equities, with Goldman Sachs Group Inc. and JPMorgan Chase & Co. trading at all-time highs as the odds for a rate hike in two weeks swelled past 65 percent and President Donald Trump’s address to Congress did little to alter views that his administration will seek pro-growth policies. The dollar surged a day after two Federal Reserve officials said the case for lifting borrowing costs March 15 has strengthened. Robust factory data from China spurred gains in metal prices.

“Fed speakers trump Trump,” Richard McGuire, the head of rates strategy at Rabobank International in London, wrote in a note. Trump’s speech lacked “fresh content for the market to trade off, with big tax cuts, deregulation and an infrastructure plan being mentioned but not supported by any details. Given this, all focus instead turned to the slew of hawkish rhetoric from Fed speakers.”

Trump reiterated broad proposals for boosting spending and cutting taxes without providing specifics that could be seen as impeding Congress’s path to enact the policies. That left investors focused on the Fed and the pace of economic growth. Data showed consumer spending rose less than projected in January, though the tight job market and low borrowing costs will continue to support consumers, whose confidence is getting a boost from optimism about lower taxes under Trump.

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Fed speakers aren’t finished. There are other officials lined up for this week, including Chair Janet Yellen, who will give an address on the economic outlook on Friday in Chicago. The Chinese People’s Political Consultative Conference, an advisory body of more than 2,000 political elites, business executives and others, opens its annual session in Beijing on March 3.

Here are the main moves in markets:

Currencies

The Bloomberg Dollar Spot Index jumped 0.6 percent as of 9:48 a.m. in New York, climbing for a fourth straight day and heading for the biggest advance since Jan. 18. The yen slumped 1 percent to 113.87 per dollar, for a third day of losses. The euro fell 0.5 percent to $1.0522 and the British pound weakened 0.7 percent to $1.2299.
Stocks

The S&P 500 Index added 0.8 percent, the most since Jan. 3 on a closing basis. The benchmark index finished February with its best monthly gain since March, climbing 3.7 percent. European stocks climbed the most since Feb. 1, rising 1.3 percent. Banks led gains among all industries.
Bonds

Yields on 10-year Treasuries rose five basis points to 2.45 percent, climbing for a third straight day to the highest level since Feb. 21. German bonds fell, with the yield on 10-year benchmarks adding six basis points to 0.27 percent after regional data showed accelerating inflation. French bonds came under more election risk after Republican candidate Francois Fillon said he would stay in the presidential race, diverting votes away from independent Emmanuel Macron, the favorite to beat National Front leader Marine Le Pen on May 7. The yield on the benchmark note due in a decade rose two basis points to 0.91 percent.
Commodities

Gold dropped for a third day, falling 0.6 percent to $1,241.49 an ounce after completing a 3.1 percent gain in February. West Texas Intermediate Crude rose 0.3 percent to $54.16. Oil ended last month 2.3 percent higher. Copper added 1.3 percent, advancing for a fourth straight session.

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