* Dow hits 21K for first time, dollar index hits seven-week
* 2-year Treasury yields hit highest since December
* European stock markets climb, FTSE hits record high
(Updates to late afternoon, adds commentary)
By Sinead Carew
NEW YORK, March 1 U.S. Treasury yields rose
along with the dollar and Wall Street rallied, lifting the Dow
above 21,000, as investors bet on an interest rate hike and gave
a sigh of relief after U.S. President Donald Trump's speech to
The three main U.S. stock indexes were on track for their
best one-day gain since Nov. 7, one day before the U.S.
presidential election, with the S&P 500 and Nasdaq also hitting
Financial stocks were the biggest boost for Wall Street
after New York Fed President William Dudley - one of the most
influential U.S. central bankers, and usually considered a dove
- said late Tuesday that the case for tightening monetary policy
had become "a lot more compelling", while San Francisco Fed
President John Williams said he saw "no need to delay" raising
"It's not necessarily the rate increase that matters. It's
that they're seeing things improving. If the Fed feels more
confident, maybe we should too," said Warren West, principal at
Greentree Brokerage Services in Philadelphia.
Bank stocks helped the Dow Jones Industrial Average top
21,000 for the first time since banks' profits get a boost from
higher interest rates.
The Dow Jones Industrial Average was up 342.98
points, or 1.65 percent, to 21,155.22, the S&P 500 gained
35.32 points, or 1.49 percent, to 2,398.96 and the Nasdaq
Composite added 79.34 points, or 1.36 percent, to
In his speech Tuesday, Trump pledged to deliver "massive"
tax relief to the middle class and corporate tax cuts, to spend
heavily on infrastructure and to ease regulations.
While some investors had hoped for specifics on how the
administration would pay for its promises, investors who had
kept money off the table ahead of the speech were relieved by a
more measured than expected tone from the U.S. president.
"It's a rally on sentiment. The sentiment is that he's going
to make big changes to tax and regulation and trade and he
looked very presidential saying it. If one of those two things
changes, the air is out of the rally," said Brian Battle,
director of trading at Performance Trust Capital Partners in
U.S. Treasury yields rose broadly with 2-year yields hitting
their highest in more than seven years on increased expectations
for a Fed rate hike in March.
Having priced in only around a 35-percent chance that the
Fed would move this month before the Fed comments, investors are
now pricing in around a 66.4-percent probability of a March
hike, according to CME Group's FedWatch tool.
Yields on the 2-year Treasury note rose to a high
of 1.308 percent, the highest point since August 2009. Benchmark
10-year notes fell 25/32 in price to yield 2.45
percent. It earlier rose to 2.471, the highest since Feb. 16.
The dollar index, which measures the greenback against a
basket of other major currencies, was up 0.5 percent and touched
its highest level since Jan. 11.
The global MSCI ACWI index, rose about 1
percent and touched a record high.
In commodity markets, oil futures turned negative after U.S.
crude inventories rose to a record high. U.S. crude fell 0.3
percent to $53.85 while Brent crude was off 0.3 percent at
The stronger dollar weighed on gold, which dropped
0.14 percent to 1,246.62 an ounce, extending Tuesday's drop.
Gains in mining and bank stocks took Britain's blue-chip
FTSE 100 index to an all-time high. It rose
1.6 percent, in line with the FTSEurofirst 300 index.
(Additional reporting by Dion Rabouin and Karen Brettell in New
York, Noel Randewich in San Francisco, Helen Reid, Jamie
McGeever and Dhara Ranasinghe in London, and Nichola Saminather
in Singapore; Editing by Nick Zieminski)