Since February 2nd, when the DOW Jones 30 index crossed above 20,000, four individual DOW components have been responsible for over 500 points of the gains which lifted the index up to today’s close of 21, 115.
These four shares are Goldman Sachs (160 DOW points), Boeing (150 points), 3M (110 points) and Apple (80 points)
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Not surprisingly, these four companies stand to benefit from the three most broad policy measures from the Trump administration: Infrastructure expansion, tax reform and financial deregulation.
However, against the backdrop of today’s stock market rally, US interest rate markets are beginning to aggressively price in an increase in the Fed Funds rates at this month’s FOMC meeting.
As of last Friday, the odds that the FED would lift rates on March 15th were 30%. At the close of trade today, the odds have soared to 82% with the yields on the US 2-year notes reaching a 9-year high of 1.30%.
Much of this price increase has been prompted by comments from voting FED Governors; who have been uncharacteristically direct in their concern about waiting too long to normalise rates.
