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The Dow Jones Industrial Average topped the 21,000 mark for the first time as bank shares rallied on rising expectations of a March Federal Reserve rate rise, and as investors parsed remarks from Donald Trump.
The Dow climbed by almost 1 per cent to 21,008 shortly after the opening bell on Wednesday. JPMorgan Chase and Goldman Sachs logged the biggest gains, rising more than 2 per cent each.
The broader S&P 500 was up by 0.9 per cent to 2,383.9, also led higher by a strong performance among financial stocks.
Financials got a lift after several top Fed policymakers signalled on Tuesday a willingness to potentially increase rates this month. The odds of a March rate increase shot up to more than 80 per cent, from less than 30 per cent last week, according to Bloomberg data on federal funds futures. Meanwhile, Treasury yields climbed sharply.
Higher interest rates are considered a positive for banks since it could boost their net interest margins — the difference in their own cost of funding and the rate they charge to borrow.
Investors also paid close attention to remarks on Tuesday evening from Donald Trump, who doubled-down on his plans to roll-out and infrastructure spending programme. Caterpillar, the world’s biggest heavy machinery maker, was among the top Dow performers, climbing by 1.7 per cent.
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