Record highs for US stocks; Dow crosses 21,000-point mark

Associated Press

Investors bet big on U.S. stocks Wednesday, giving the market its biggest single-day gain in nearly four months and pushing the major indexes to record highs.

The Dow Jones industrial average rose above 21,000 points for the first time in what was the biggest gain for the blue-chip index so far this year.

Banks were the biggest gainers amid heightened expectations that an improving economy will lead to higher interest rates. Energy stocks also notched big gains. Utilities and real-estate stocks lagged. The dollar strengthened against the yen and euro and other major currencies. Bond prices fell, as did the price of crude oil and gold.

Optimism over corporate tax cuts, deregulation and other business-friendly policy proposals reiterated by President Donald Trump during a speech before Congress helped fuel the rally. Growing speculation that the Federal Reserve may soon elect to raise interest rates again also helped put traders in a buying mood.

“We’re seeing a strong risk-on rally in the face of rising expectations of Fed action as early as March based on a belief there will be a pro-growth agenda that gets enacted,” said Bill Northey, chief investment officer of the Private Client Group at U.S. Bank. “It’s been what I would characterize as a bit of market euphoria on the back of the president’s address to the joint session of Congress last night.”

All four indexes closed at new all-time highs. Each had set new highs last month.

Bond prices fell and yields rose after a key Federal Reserve official, New York Fed President William Dudley, said the case for raising interest rates had gotten stronger. The 10-year Treasury yield rose to 2.46 percent from 2.40 percent late Tuesday.

Strong gains in major global stock indexes overnight and into early Wednesday hinted at the possibility of another milestone day for Wall Street.

Better-than-expected company earnings and outlooks from Lowe’s, Big 5 Sporting Goods and other companies also helped give the market a boost.

But it is the prospect of more profitable days ahead for Corporate America that encouraged investors to pile into stocks.