While you were sleeping: UPDATED Rally continues before Trump's speech

Wall Street's rally extended to a further record high as investors geared up for US President Donald Trump's state of the union address to the Congress on Tuesday that might offer more details on tax promises.

He is also expected to elaborate on plans for health care reform and infrastructure spending.

"We're going to start spending on infrastructure big," the president told a group of governors at the White House on Monday.

His comments lifted the industry's stocks.

"If we have a market that is willing to accept a roadmap that says we are going to repeal and replace Affordable Care Act and then have some form of tax reform by the August recess, I think the market will continue to be supportive," New York-based Wunderlich Equity Capital Markets chief market strategist Art Hogan told Reuters.

At the close of trading in New York, the Dow Jones Industrial Average gained another 15.68 points, or 0.08%, to 20,837.44.

The Nasdaq Composite Index advanced 0.3% to 5861.90 and the Standard & Poor's 500 Index rose 0-1% to 2369.73.

"We are concerned the markets could be heading for a harsh reality check if the Trump administration fails to meet high expectations as reflected in strong equity gains, including risky assets," Piotr Matys, currency strategist at Rabobank in London, wrote to clients, Bloomberg reported.

"It seems to us the markets are too optimistic, looking from the glass half full perspective and not pricing enough of the negatives."

Time Warner rises
Time Warner shares rose after the new chairman of the Federal Communications Commission said he didn't expect the agency to have a role in reviewing AT&T's $US85 billion takeover of Time Warner, the Wall Street Journal reported.

Apple shares rose 0.2% after Warren Buffett said Berkshire Hathaway more than doubled its stake in the technology company in 2017.

Tesla shares dropped more than 5% after Goldman Sachs cut its rating on the electric carmaker's stock to "sell" from "neutral" and downgraded its price target.

Concerns that Tesla's Model 3 production this year might be delayed, as well as expectations the company will sell stock to raise $US1.7 billion, prompted the downgrade by Goldman Sachs analyst David Tamberrino, according to Reuters.

Meanwhile, a National Association of Realtors report showed its pending home sales index fell 2.8% to 106.4 in January, from an upwardly revised 109.5 in December 2016. It's the lowest level in one year.

"The significant shortage of listings last month along with deteriorating affordability as the result of higher home prices and mortgage rates kept many would-be buyers at bay," Lawrence Yun, NAR chief economist, said.

"Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it's not uncommon to see a home come off the market within a month."

In Europe, the Stoxx 600 Index ended the session with a decline of 0.1% from the previous close. However, the UK's FTSE 100 Index added 0.1%, while Germany's DAX Index rose 0.2%. France's CAC 40 Index ended the day unchanged from the previous close.

(BusinessDesk)