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Wall Street, dollar, surge higher after Trump tax talk
February 8, 2017 / 12:54 AM / in 8 months

Wall Street, dollar, surge higher after Trump tax talk

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 7, 2017. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Wall Street stocks surged to record highs on Thursday and the U.S. dollar and bond yields rose after U.S. President Donald Trump said he would release a “phenomenal” tax plan in the next few weeks.

Investors have been waiting for details on Trump’s election campaign pledge to stimulate economic growth with large-scale fiscal stimulus through infrastructure spending and tax cuts.

The three main U.S. stock indexes ended in record territory as most sectors gained. Financials .SPSY, which have soared since the election, were the best-performing group, up 1.4 percent after three sessions of declines, while energy shares .SPNY gained 0.9 percent.

In a meeting with airline executives, the president said his administration will be announcing “something phenomenal in terms of tax” over “the next two or three weeks”.

The Dow Jones Industrial Average .DJI rose 118.06 points, or 0.59 percent, to end at 20,172.4, the S&P 500 .SPX gained 13.2 points, or 0.58 percent, to 2,307.87 and the Nasdaq Composite .IXIC added 32.73 points, or 0.58 percent, to 5,715.18.

The U.S. dollar rose more than 1 percent against the yen JPY= to a six-day high, the euro fell to the day's low against the dollar EUR=, and the greenback saw a one-week high against the Swiss franc CHF=.

Benchmark 10-year U.S. Treasury note yields US10YT=RR were at 2.393 percent after hitting a three-week low of 2.325 percent Wednesday.

“It’s been a broad-based dollar rally, driven by the headlines that Trump plans to announce something phenomenal on taxes in the next few weeks, in his words,” said Kathy Lien, managing director of BK Asset Management.

“That was really the crux of the dollar rally shortly after his election and I think investors are getting really excited about that again.”

The dollar .DXY had gained more than 5 percent against a basket of major currencies in the six weeks after Trump’s election but has given back some of those gains as he has focused more on trade and immigration than fiscal stimulus.

Major world stock indexes also climbed on Thursday as investors took inspiration from corporate earnings and put aside the political risks that have dominated markets this week.

The MSCI all-country world stock index .MIWD0000PUS rose 0.31 percent to its highest in two weeks.

Shares rose in Europe, where investors have been pondering the potential impact of Trump’s protectionist policies and the threat of similar policies resulting from upcoming European elections in France and Germany.

The pan-European STOXX 600 index closed 0.78 percent higher.

Oil held onto gains, with U.S. prices rising on evidence that gasoline demand could strengthen in the world’s biggest oil market. [O/R]

Benchmark Brent crude LCOc1 settled up 51 cents at $55.63 per barrel while U.S. light crude CLc1 settled 66 cents higher at $53.00.

Concern over French and German elections later this year saw investors sell bonds of lower-rated euro zone countries earlier this week. However, yields started falling late on Wednesday and fell further on Thursday.

French 10-year government bond yields FR10YT=TWEB fell below 1.0 percent for the first time in two weeks.

Additional reporting by Lewis Krauskopf, Jessica Resnick-Ault, Gertrude Chavez-Dreyfuss and Dion Rabouin in New York; Editing by Nick Zieminski and James Dalgleish

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