Ossoff wins the Georgia runoff against Perdue, CNN projects
New York (CNN Business)Wall Street shrugged off a shocking day in America’s history Wednesday as Trump supporters stormed the US Capitol in a violent attempt to disrupt the Congress’ electoral count.
Yet if you looked only at the stock market’s performance, it was good day. The Dow (INDU) closed at a new all-time high and breached 31,000 points for the first time in its history. The broader S&P 500 (SPX) also ended higher, as the Nasdaq Composite (COMP) closed in the red.
So why did Wall Street reach new heights even as the President doubled down on false claims that election results were fraudulent and thousands of his supporters broke into government buildings?
Quite simply this: Investors don’t really look at what’s happening right now. They look to the future and what it could bring for the companies they invest in, or the economy as a whole.
And to that point, the Senate flipped in favor of the Democrats late Wednesday, clearing the way for President-elect Joe Biden’s economic agenda and likely more economic stimulus to help the nation recover from the pandemic.
Even though Democratic control of the House, Senate and White House could spell tax increases in the future, investors chose to look on the bright side — more government help during the crisis.
Biden has also promised extensive investments in infrastructure and clean energy, all aimed at creating millions of jobs. This helped boost stocks in the industrials and materials sectors. Banks and financial firms also climbed higher on prospects of higher interest rates in the future, which translates to bigger profits on their lending businesses. Tech companies, which face the prospect of more regulation and scrutiny, felt some pain.
So that’s why, despite the unprecedented chaos at the Capitol, Wall Street remained mostly optimistic, even after stocks came off their afternoon highs.
America has overcome civil unrest before. Wall Street is betting it will do so this time, too.
Then again, the market might also get reality check Thursday and sell off. There is, after all, the ongoing pandemic, and worsening infection numbers have led to stricter rules in various states. But again, investors will likely take the long view: The next administration is expected to make good on its promises to act forcefully to help America’s businesses and workers get back to strength.
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