Dow closes at 12th straight record high as stocks mark time before Trump speech

PUBLISHED : Tuesday, 28 February, 2017, 7:54am
UPDATED : Tuesday, 28 February, 2017, 7:54am

Wall Street closed slightly higher on Monday and US Treasury yields rose on hopes for rising rates and expectations for an infrastructure spending announcement in US President Donald Trump’s speech Tuesday night.

Oil futures were a mixed bag as the prospect of rising US production offset reports of compliance with an OPEC production cut agreement.

While many investors were hoping Trump would unveil details of pro-business policies including tax reform, cash repatriation or infrastructure spending during his address to Congress Tuesday night, others were not ready to make new bets as they worried that the speech would disappoint.

Trump said earlier in the day that he would issue a big statement on infrastructure during his speech on Tuesday, but also said tax reform details would not be revealed until after the administration’s proposal on health care.

“Investors want something concrete on corporate taxes or repatriation. They’re more focused on that than the affordable care act, but the first focus of the administration is ACA,” said Jeffrey Saut, chief investment strategist at Raymond James Financial in St. Petersburg, Florida.

The Dow Jones Industrial Average rose 15.68 points, or 0.08 per cent, to 20,837.44, the S&P 500 gained 2.39 points, or 0.10 per cent, to 2,369.73 and the Nasdaq Composite added 16.59 points, or 0.28 per cent, to 5,861.90.

The Dow Jones Industrial Average scaled its 12th consecutive record high, its longest such run since 1987.

MSCI’s benchmark world stock index was unchanged after it hit a record high Thursday. Europe’s benchmark index of leading 300 shares fell 0.2 per cent.

Benchmark 10-year notes were last down 13/32 in price to yield 2.363 per cent, from a yield of 2.317 per cent late Friday. Dallas Fed President Robert Kaplan said the US central bank might need to raise interest rates in the near future to avoid falling behind the curve on inflation.

“What the market reacted to was a combination of (Kaplan’s comments) with the fact that we might be getting signs that legislation may be sooner rather than later on things like tax reform and infrastructure, and that’s all very growth-positive,“ said Priya Misra, head of global rates strategy at TD Securities in New York.

The dollar was up 0.05 per cent against a basket of major currencies ahead of Trump’s speech and comments from Federal Reserve officials also expected this week.

The greenback reversed earlier weakness and the Japanese yen weakened, indicating a perception that a rate hike is more likely in coming months.

“I’d say the fundamental driver is interest rate differentials,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

In commodities, Brent crude settled down 0.1 per cent at US$55.93 per barrel while US West Texas Intermediate settled up 0.1 per cent at US$54.05 per barrel as a global supply glut appeared to ease.

Spot gold turned down 0.4 per cent to US$1,251.3 an ounce, as its inability to hold above the 200-day moving average was a source of technical weakness. The precious metal had risen to US$1,263.80 earlier in the day, its highest since November 11.