Equities rallied on both sides of the Atlantic amid increased bets on a US Federal Reserve interest rate hike this month.

The US dollar also rose, while Treasuries declined.

"The case for monetary policy tightening has become a lot more compelling," New York Fed President William Dudley told CNN on Tuesday evening.

San Francisco Fed President John Williams agreed.


"A rate increase is very much on the table for serious consideration at our March meeting," Williams said in a speech, also on Tuesday.

Fed Chair Janet Yellen is slated to speak on Friday.

"Williams and Dudley are very strongly signalling that fact that March is a live meeting, and that's occurring against the backdrop of consistently strong [economic] numbers," Richard Franulovich, a senior currency strategist at Westpac Banking Corporation in New York, told Reuters.

US President Donald Trump's keenly-awaited address to Congress on Tuesday was light on details but did little to dampen the mood.

"Fed speakers trump Trump," Richard McGuire, the head of rates strategy at Rabobank International in London, wrote in a note, Bloomberg reported.

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," McGuire noted. "Given this, all focus instead turned to the slew of hawkish rhetoric from Fed speakers."

In 1.12pm trading in New York, the Dow Jones Industrial Average climbed 1.5 per cent, while the Nasdaq Composite Index gained 1.2 per cent. In 12.57pm trading, the Standard & Poor's 500 Index advanced 1.4 per cent.

The three benchmark indexes touched fresh record highs, with the Dow rising above 21,000 for the first time.

The Dow Jones industrial average above 21,000, Wednesday, March 1, 2017. Photo / AP
The Dow Jones industrial average above 21,000, Wednesday, March 1, 2017. Photo / AP

Gains in shares of JPMorgan Chase and those of American Express, up 3.3 per cent and 2.2 per cent respectively, led the advance in the Dow.

In this bullish environment, Snap Inc will price its initial public offering after the US stock market closes. The owner of Snapchat is on track to price its IPO above its target of between US$14 and US$16 a share, the Wall Street Journal reported, citing people familiar with the offering.

Bucking the trend, shares of Intel fell 1.3 per cent while those of Wal-Mart shed 0.5 percent, the only two stocks in the Dow declining in early afternoon trading.

In Europe, the Stoxx 600 Index ended the session with a gain of 1.4 per cent from the previous close.The UK's FTSE 100 Index added 1.6 per cent to close at a record high, Germany's DAX Index increased 2 per cent, while France's CAC 40 Index strengthened 2.1 per cent.

European stocks are back in favour. Since October global funds have made a "significant rotation" out of US stocks into Europe excluding the UK and into Japanese equities, equity strategists at HSBC Holdings wrote in a note, Bloomberg reported.

"This rising optimism towards Europe suggests that investors are relatively relaxed regarding the political uncertainty facing Europe over the next twelve months," HSBC strategists including Amit Shrivastava wrote in their note.