However, if you look only at the performance of the stock market, it will be a good day. O Dow (INDU) closed at a new historical record and surpassed 31,000 points for the first time in its history. The broadest S&P 500 (SPX) also ended up high, as the Nasdaq Compound (COMP) closed in red.
Quite simply: investors do not really look at what is happening now. They look to the future and what it can bring to the companies they invest in or the economy as a whole.
And at that point, the Senate took a turn in favor of Democrats on Wednesday, paving the way for President-elect Joe Biden’s economic agenda and probably more economic stimulus to help the nation recover from the pandemic.
While Democratic control of the House, Senate and White House could mean tax hikes in the future, investors opted to look on the bright side – more government aid during the crisis.
Biden also promised big investments in infrastructure and clean energy, all with the aim of creating millions of jobs. This helped to boost stocks in the industrial and materials sectors. Banks and financial firms have also risen with the prospect of higher interest rates in the future, which translates into higher profits in their credit businesses. Technology companies, facing the prospect of more regulation and scrutiny, I felt a little bit of pain.
So that’s why, despite the unprecedented chaos on Capitol Hill, Wall Street remained optimistic, even after stocks fell from their evening highs.
America has overcome civil unrest before. Wall Street is betting that this time too.
Then again, the market can also check the reality on Thursday and sell. After all, there is an ongoing pandemic, and the worsening number of infections has led to stricter rules in several states. But again, investors are likely to have a long-term view: the next government is expected to live up to its promises to act vigorously to help businesses and workers in the United States recover.
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