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Wall Street looked set to rise on Thursday, despite yesterday’s chaos in Washington, when a pro-Trump crowd stormed the Capitol building, forcing lawmakers into hiding and arousing international outrage and concern.
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The S&P 500 futures are aiming for gains when trading starts on Wall Street late Thursday morning. European stock indices were moderately higher, with Stoxx Europe 600 rising 0.2 percent and the German DAX index 0.4 percent higher. Most Asian indices closed higher.
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Even as scenes of guns drawn in Congress hallways unfolded on Wednesday afternoon, the S&P 500 managed to maintain its gains, closing 0.6 percent more. Overall, it was another example of stock markets that seem divorced from reality – look at last year’s double-digit gains on Wall Street as a pandemic stifled global economies.
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The Senate and the House voted on Thursday to certify Joseph R. Biden Jr. as the winner of the 2020 presidential election.
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Democratic control of the U.S. Senate – made possible by the results of two runoff elections in Georgia this week – is expected to make it easier for Biden to pass stimulus measures to boost the economy. Investors are also betting on the launch of coronavirus vaccines to eventually energize business activity that was dormant during the pandemic.
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“The markets paid very little attention to the turbulent behavior in Washington,” wrote ING analysts in a note. Instead, investors maintained an interest in riskier assets, such as stocks, driven by the success of Democrats in Georgia.
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Treasury bond yields continued to rise, driven by expectations that additional fiscal spending in Washington will generate more bond issues, reaching 1.06 percent on 10-year bonds. Yield rose above 1 percent this week for the first time since March.
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Goldman Sachs economists said they expected Democrats to spend $ 750 billion in fiscal stimulus in the first quarter of the year, now that they have control of the Senate. The US investment bank also raised its forecast for economic growth this year from 5.9% to 6.4%.
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Oil remained at an 11-month high after Saudi Arabia announced on Tuesday that it would cut oil production. The US oil benchmark, West Texas Intermediate, up 0.6 percent on the day, hit $ 51.28 a barrel before dropping slightly, while Brent oil hit $ 54.90.
When Jamie Dimon, the chief executive of JPMorgan Chase, issued a statement condemning the violence in Washington on Wednesday, he urged “our elected leaders” to call for an end to it. He did not directly mention President Trump.
Neither Charles Scharf, the chief executive of Wells Fargo (“The behavior in Washington, DC, is unacceptable today”) or the chief executives of Goldman Sachs, Bank of America or Citigroup. Business leaders and organizations often refer to “leaders” or call for a “peaceful transition of power” for President-elect Joseph R. Biden Jr.
Business leaders rarely criticized Trump directly. When he announced, shortly before taking office, that Stephen K. Bannon would be his chief strategist at the White House, Democrats on Congressional committees that oversee the financial sector asked industry leaders to publicly oppose the nomination. Lawmakers called Bannon “a fanatic loved by white supremacists” and said business leaders had “a moral obligation to speak openly”.
None did.
After Trump took office, top executives found themselves in the uncomfortable position of deciding whether to participate in so-called business advisory boards, common forums for business leaders to influence a new president’s policy, even when he was implementing policies many saw it as hateful. . Several of those councils fell apart after Trump refused in 2017 to condemn violence by white supremacists in Charlottesville, Virginia, and said there were “very good people” and “guilt” on “both sides”
With the president’s increasing efforts to subvert the election, organizations have grown bolder. On Monday, for example, 170 business leaders signed their names in a statement, organized by business advocacy organization Partnership for New York City, asking Congress to certify the outcome of the presidential election, although some key members were absent.
On Wednesday, when a crowd broke into the Capitol, organizations not known for vocal statements seemed to no longer care about the political ramifications of speaking out against Trump.
The research group High Frequency Economics suspended the regular publication of its research notes for the first time since September 11, 2001, attacked and sent a note to its clients: “We at High Frequency Economics are upset about the role of the president from the United States to incite this riot, and we are sad that he cannot find the character to stand up in front of the crowd he has created, repress the violence and send everyone home. “
And Business Roundtable, a group of chief executives, including Dimon, from some of the country’s largest companies, was straightforward about the cause of the violence.
“The chaos that unfolds in the country’s capital is the result of illegal efforts to overturn the legitimate results of a democratic election,” said the group. “The country deserves better. The Business Round calls on the president and all relevant authorities to end chaos and facilitate the peaceful transition of power. “
The Department of Labor is scheduled to present new evidence on the extent of unemployment across the country on Thursday morning, when it releases its weekly report on unemployment insurance claims.
Initial claims for benefits remained at levels never seen in previous recessions, and analysts surveyed by Bloomberg expect an increase from last week’s report.
“Google’s search trends show an upward trend in terms of how the ‘unemployment process’ continued this week,” said Julia Pollak, a labor economist at online jobs site ZipRecruiter.
“The virus is still spreading, hospitalizations have reached a new record and there is a downturn in demand for certain services,” said Pollak. “Many requests and restrictions on staying at home are causing an even greater decline. You see a drop in all restaurant data. “
Before adjusting for seasonal variations, the state’s new claims for unemployment benefits were over 800,000 in each of the last four weekly reports.
The job market has improved since the coronavirus pandemic broke out and closed the economy. But of the more than 22 million jobs that disappeared in the spring, 10 million remain lost.
“Employers are very cautious about rehiring, while they have had to increase layoffs,” said Kathy Bostjancic, chief economist at Oxford Economics for the United States. “The resurgence of the virus is really the main culprit here.”
“It is important to note that, since August, payroll gains are getting smaller,” said Bostjancic.
With a recently enacted $ 900 billion aid package that includes an extension of federal unemployment benefits, most unemployed people can at least wait for more financial aid.
A more complete picture of employment in December will arrive on Friday, when the Department of Labor releases its monthly employment report, and most analysts expect smaller payroll gains – or even the first net loss since April.