US open: Dow tops 21k as markets buoyed by expected rate hike, Trump speech

The Dow surpassed the 21,000 mark for the first time on Wednesday as US equity markets were buoyed by an expected March interest rate hike and a more conciliatory tone from President Donald Trump yesterday when he addressed Congress, while the dollar gained.

Investors were also looking at slew of economic releases and more speeches by Federal Reserve officials.

At 1544 GMT, the Dow Jones Industrial Average rallied 1.14% to 21,049.46, the S&P 500 rose 0.99% to 2,386.96 and the Nasdaq was up 0.88% to 5,876.87.

Meanwhile, West Texas Intermediate up 0.57% to $54.32 per barrel and Brent crude rose 0.79% to $56.97.

In currency markets, the dollar gained 0.53% against the pound to 0.8121, was up 0.21% versus the euro to 0.9475 and was 0.94% firmer against the yen at 113.83.

On Tuesday, Federal Reserve President William Dudley said the case for an interest rate rise had become "a lot more compelling", while San Francisco Fed President John Williams told CNN that a hike was "on the table for serious consideration" at the next Fed meeting in March.

Dallas Fed President Robert Kaplan told CNBC that a rate hike would be best "sooner rather than later".

The comments boosted the dollar and pushed market implied odds of a rate hike in mid-March as high as 70% at one point on Tuesday evening, before they fell back to around 50%.

The Fed’s Kaplan and Lael Brainard are among those due to make speeches later in the day.

Meanwhile, Trump's first address to a joint session of Congress on Tuesday, struck an upbeat but measured tone, as he said he was open to a broad immigration reform bill but was parse on details regarding his economic plans, apart from a $1trn investment in infrastructure.

Michael Hewson, chief market analyst at CMC markets, said that the pledge to spend $1trn was a “laudable one” but that a serious obstacle remains, namely Congress, which still has to agree to a new debt ceiling limit by 15 March.

“Once again markets are looking at this through rose tinted glasses expecting that a Republican controlled house will simply wave this through, while we still have little in the way of detail in terms of tax policy,” he said.

On the data front, Markit's final manufacturing purchasing managers' index for February fell to 54.2 from January's 22-month peak of 55.0, and was a touch lower than the flash estimate of 54.3. A reading above 50 indicates expansion, while a reading below signals contraction.

The decline in the index reflected a moderation in new order growth from January’s 28-month peak, and a slightly softer rise in output volumes.

The Institute for Supply Management’s headline manufacturing index rose in February to 57.7 from 56.0 the previous month, beating expectations for a reading of 56.5 and marking the best level since August 2014.

The employment index fell to 54.2 from 56.1 the month before, while the new orders index came in at 65.1, up from 60.4 in January. The production index edged up to 62.9 from January's 61.4 and the prices paid index printed at 68.0 compared to 69.0 the month before.

In corporate news, Weight Watchers International rocketed 30.9% after its quarterly earnings late on Tuesday beat analysts' expectations.

Office Depot surged 18.7% after its quarterly profit and revenue beat expectations following cost cutting measures.

On the down side, Best Buy fell 4.35% after the technology retailer missed revenue forecasts and posted a gloomy outlook.

AMC Entertainment Holdings nudged 2.07% lower after chief executive Adam Aron said he expects blockbuster 2017 revenue, but the company posted a 20% drop in profit.