U.S. stocks rose to records, the dollar jumped the most in six weeks and Treasuries fell as investors grew increasingly confident global economic growth is accelerating, clearing the path for higher interest rates in America.
Banks led gains in the S&P 500 Index as the odds for a rate hike in two weeks swelled past 65 percent and President Donald Trump’s address to Congress did little to alter views that his administration will seek pro-growth policies. The dollar surged a day after two Federal Reserve officials said the case for lifting borrowing costs March 15 has strengthened. Robust factory data from China spurred gains in metal prices.
“Fed speakers trump Trump,” Richard McGuire, the head of rates strategy at Rabobank International in London, wrote in a note. Trump’s speech lacked “fresh content for the market to trade off, with big tax cuts, deregulation and an infrastructure plan being mentioned but not supported by any details. Given this, all focus instead turned to the slew of hawkish rhetoric from Fed speakers.”
Trump reiterated broad proposals for boosting spending and cutting taxes without providing specifics that could be seen as impeding Congress’s path to enact the policies. That left investors focused on the Fed and the pace of economic growth. Data showed consumer spending rose less than projected in January, though the tight job market and low borrowing costs will continue to support consumers, whose confidence is getting a boost from optimism about lower taxes under Trump.