All the three key indexes reached their all-time highs on the first trading day of March following optimism over President Trump's Tuesday night speech. The Dow rallied past the psychological level of 21,000 for the first time ever and matched the fastest 1000-point march in history. In his speech, Trump focused on introducing a "historic" tax reform and a "massive" infrastructure plan, which, along with his presidential tone boosted investor sentiment. Moreover, rising Fed rate hike chances benefitted the financial sector and gradually the broader markets.
For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) increased 1.5%, or 303.31 points to close at 21,115.55. The S&P 500 rose 1.4% to close at 2,395.96. The tech-laden Nasdaq Composite Index closed at 5,904.03, also gaining 1.4%. The fear-gauge CBOE Volatility Index (VIX) declined 3.8% to settle at 12.43. A total of around 8.1 billion shares were traded on Wednesday higher than the last 20-session average of 6.9 billion shares. Advancers significantly outpaced declining stocks on the NYSE. For 66% stocks that advanced, 32% declined.
What Boosted The Benchmarks?
Trump maintained a more "presidential" tone in his Tuesday night speech, which boosted investor sentiment further. He said that several big companies have "announced that they will invest billions of dollars in the United States and will create tens of thousands of new American jobs." He added that his economic team is "developing historic tax reform that will reduce the tax rate on" the U.S. companies. His trillion dollar infrastructure spending plan also boosted sentiment.
Additionally, New York Fed President William Dudley said that the case for a rate hike had become "a lot more compelling" since November's presidential election and expects a rate increase "relatively near future". San Francisco Fed President John Williams said that, "in my view, a rate increase is very much on the table for serious consideration" at the March 14-15 meeting.
Rising rate hike prospects led the Financial Select Sector SPDR (XLF) to increase 2.9% and became the biggest gainer among the S&P 500 sectors. Key component from this sector like Sachs Group, Inc. ( GS ) and JPMorgan Chase & Co. ( JPM ) increased 1.9% and 3.3%, respectively. Both the Dow component hold a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
U.S. commercial crude-oil inventories rose by 1.5 million barrels in the week ended Feb. 24, according to the Energy Information Administration. Lower-than-expected rise in crude inventories boosted the energy sector. The Energy Select Sector SPDR (XLE) moved 2% higher. Key energy companies including Chevron Corporation ( CVX ) and Exxon Mobil Corporation ( XOM ) rose 1.2% and 2.1%, respectively.
In economic news, personal income rose 0.4% in January according to the Bureau of Economic Analysis. Also, personal spending increased 0.2% in the first month of this year. The ISM manufacturing index rose from January's 56% to 57.7% in February, reaching its best level since August 2014.
However, U.S. construction spending decreased by 1% in January, registering its worst decline since March 2002. Additionally, Fed Beige Book stated that "businesses were generally optimistic about the near-term outlook but to a somewhat lesser degree than in the prior report."
Stocks That Made Headlines
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