Dow soars 300 points, zooming past 21,000 for the first time

By Matt Egan

NEW YORK (CNNMoney) -- Wall Street is giving President Trump's first speech to Congress a standing ovation.

The Dow soared 300 points and zoomed beyond the 21,000 level for the first time ever on Wednesday. The milestone comes barely a month after the Dow hit 20,000 for the first time.

Trump's primetime address to Congress received high marks from viewers, and has clearly left Wall Street in good spirits, too. The Dow is on track for its best day since November 7, the day before the election.

It's not that the speech gave investors the policy details they were seeking. If anything, Trump gave fewer specifics on major issues like tax reform, Obamacare and deregulation than many expected.

The key for Wall Street is the tone of Trump's speech: he sounded a lot more optimistic and presidential than in previous speeches.

"The speech didn't break any new ground, but it was much more orderly and methodical than we are used to hearing," said Nicholas Colas, chief market strategist at brokerage firm ConvergEx.

"It was a solid speech from the perspective of putting Trump on a truly presidential footing," Colas said.

For instance, Trump asked members of Congress to "join me in dreaming big, and bold and daring things for our country."

That's a welcome shift given the turbulent start to Trump's term that has mired the administration in controversy.

Chris Krueger, a Cowen & Co. analyst, summed the speech up this way: "Bigly delivery, more optimism, less detail."

All told, the Dow has now skyrocketed 2,700 points since Trump's victory in November.

If the Dow closes above 21,000 on Wednesday, it would be just 24 trading days since the 20,000 milestone. That would tie the record set in 1999 for the shortest time period between 1000-point milestones, according to Ryan Detrick of LPL Financial.

Of course, that late 1990s rally took place from lower levels, making it more impressive on a percentage basis. It also occurred during what turned out to be the height of the dotcom bubble that imploded soon afterwards.

Bank stocks have been among the biggest winners of the Trump rally, and that was true again on Wednesday. But the latest bank surge didn't appear to be linked directly to Trump's speech, which didn't mention anything about efforts rip up the Dodd-Frank Wall Street reform law.

Instead, big banks like Bank of America and Citigroup jumped more than 2% apiece due to increased confidence that the Federal Reserve will raise interest rates this month. That would be good news for banks, because ultra-low rates make it difficult for them to make money.

Rate hike hopes were on the rise after New York Fed President Bill Dudley told CNN's Richard Quest that the case for raising rates has become "a lot more compelling."

"There's no question that animal spirits have been unleashed a bit post the election," Dudley said.

The question is whether animal spirits have now carried stocks beyond what's justified. After all, most of Trump's promised policy changes have yet to get through Congress, let alone take effect.

That's why some are concerned that stocks are now expensive. Even before this week's rally, the S&P 500 was trading at 17.7 times its projected earnings for the next 12 months, according to FactSet. That's this valuation metric's highest level since May 2004, FactSet said.

"The rally has gone beyond fundamentals, with valuations at extremely high levels by historical standards," said Brad McMillan, chief investment officer for Commonwealth Financial Network.

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