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NEW YORK (Reuters) - Global equity prices rallied and the Dow Jones Industrial Average blew past the psychological 20,000 level on Wednesday, lifted by strong Japanese trade data, robust earnings and investor hopes that U.S. President Donald Trump will press ahead with a large fiscal spending package.
The rally in stocks boosted U.S. Treasury debt yields, but lingering concerns about growing protectionism and the potential negative effects on global trade and growth pushed the U.S. dollar lower.
MSCI's world index, which tracks shares in 46 countries, hit a 19-month high, up 0.8 percent.
Data showing Japan's exports rose for the first time in 15 months in December and strong corporate results in Europe boosted the index. Rallying U.S. stocks pushed it higher.
The Dow, which came within a point of 20,000 on Jan. 6, had struggled to top it as investors looked for clarity on the new U.S. administration's policies.
Strong earnings and renewed focus on Trump's pro-growth initiatives, however, reignited a post-election rally and pushed the three major benchmark U.S. stock indexes to record highs.
"It was definitely a milestone that the market has been focused on for really the better part of two months and you were starting to get a little bit of anxiety as to whether it was going to be surmounted or not," said Julian Emanuel, Equity Strategist at UBS in New York.
"We are particularly encouraged to see financials acting well again because they have been the leadership."
Trump has made several business-friendly decisions since taking office on Friday, including signing executive orders to reduce regulatory burden on domestic manufacturers and clearing the way for the construction of two oil pipelines.
Sentiment was also lifted by better-than-expected fourth-quarter earnings. Of the 104 S&P 500 companies that have reported results through Wednesday morning, nearly 70 percent have beaten expectations, according to Thomson Reuters I/B/E/S.
Earnings are expected to show growth of 6.8 percent for the quarter, the strongest in two years.
The Dow Jones Industrial Average rose 155.8 points, or 0.78 percent, to finish at 20,068.51, the S&P 500 gained 18.3 points, or 0.80 percent, to end at 2,298.37 and the Nasdaq Composite added 55.38 points, or 0.99 percent, to close at 5,656.34.
European shares rose sharply, boosted by strong earning from Logitech and Banco Santander.
Europe's broad FTSEurofirst 300 index closed up 1.31 percent at 1,448.08.
Rallying stocks sent U.S. Treasury debt yields higher. Benchmark yields hit a four-week high following a poor $34 billion auction of five-year Treasury notes, as investors further scaled back their bond holdings.
Benchmark 10-year Treasury notes were down 14/32 in price to yield 2.521 percent, up from 2.471 percent late Tuesday.
The rush to own stocks also eroded bullion's safe-haven attraction and gold prices fell to a 1-1/2-week low. Spot gold was down 0.68 percent to $1,200.51 an ounce.
The dollar failed to maintain Tuesday's upward momentum and hit a roughly seven-week low against a basket of major currencies on lingering concerns about trade protectionism.
"Rather than hearing about fiscal stimulus, which I think most people assume is the gateway to higher interest rates and a stronger dollar, out of the gate from Trump we've heard about building a wall and trade protectionism," said David Gilmore, partner at FX Analytics in Essex, Connecticut.
The dollar index, which measures the greenback against a basket of six other major currencies, was down 0.41 percent to 99.942.
Oil prices settled little changed, reversing earlier losses even after data showing a build in U.S. crude inventories reinforced traders' sentiment that oil is trapped in a range by expected OPEC production cuts and U.S. output growth.
Brent crude settled down 36 cents, or 0.65 percent, at $55.08 a barrel, and U.S. crude settled down 43 cents, or 0.81 percent, at $52.75.
Reporting by Saqib Iqbal Ahmed; Additional reporting by Herbert Lash and Sam Forgione in New York and Tanya Agrawal in Bengaluru; Editing by Nick Zieminski and James Dalgleish