Wall Street is continuing to hit record highs in spite of the U.S Capitol lockdown that has shaken the country. Stocks continued rallying on Thursday (7 January) seeing 24 hour period of record highs. The general feeling on Wall Street is that the scenes seen at Wall Street, however damaging and headline grabbing they may be, can be brushed aside as a single, isolated incident, rather than larger movement that will have a knock-on effect for the future of the US economy.
Democratic administration inspires investor confidence
Instead of a negative reaction to the events that unfolded in Washington on Wednesday, expectations are that the poised Democratic control of both the White House and the Senate means that more stimulus is likely on the horizon for the economy. The rising stocks seen on Thursday are attributed to an increase in investor confidence that more fiscal stimulus will be introduced by the Biden Administration, bringing with it economic growth.
Ultimately, Wall Street has swept the Washington chaos aside, instead responding positively to Democratic control of the Senate and the official confirmation of Biden’s election victory – even if it was delayed. Investor confidence has perhaps been further cemented with the slightly surprising news that Trump has conceded and promised an “orderly transition of power”. Previously, fears that Trump would refuse to be willing to hand over control of the White House had left some analysts and investors on edge.
Wall Street’s Washington Shrug ‘No Mystery’
Speaking to CNBC news, Peter Boockvar, chief investment officer at Bleakley Advisory Group, stated that there should be “no mystery” about the fact that the markets didn’t react negatively to the scenes in Washington, indicating that the events have no bearing on the long term economic future. He did, however, label the scenes “disturbing” and disgraceful. Other analysts and experts appear to have echoed Boockvar’s point of view. It’s expected that Congress will now deliver $2,000 stimulus cheques to all American citizens and will increase spending on infrastructure. Other measures are expected to be taken to help aid economic recovery following the impact of the Covid-19 pandemic.
The S&P 500 rose 1.5% after Joe Biden’s election victory confirmation in Congress, meanwhile the Dow Jones Industrial Average rose by 1%, hitting an intraday high of over 31,000. The Nasdaq composite was 2.1% higher, surpassing 13,000 for the first time ever. These rises came on top of gains made on the previous day, when Democrat Raphael Warnock won the first of the two Georgia run-offs.