Stocks soar while Wall Street ignores Washington violence

For investors looking to the future, the Democratic sweep in the Senate, which gives the party control of the White House and Congress, was the most important news in recent days. Controlling all three branches of government gives an advantage to the agenda of the next Biden government and could mean faster and more generous approval of additional stimulus to get the economy back on track.

That news overcame the shocking images of Trump supporters in turmoil storming the U.S. Capitol building on Wall Street. The Dow Jones Index on Wednesday rose from 31,000 points for the first time in history and closed at a higher point.

The optimism on Wall Street is not a complete surprise. Historically, US stocks have not been affected by civil unrest, as long as the turmoil has no tangible impact on profits or economic growth.

If the market closed at current levels, the Dow would register its first result above 31,000 points, and the Nasdaq would close above 13,000 points for the first time in history.

But anyone concerned about stocks that may be rising too fast for their own good can breathe, said Thomas Mathews, market economist at Capital Economics. “We still don’t think that stock prices look too high compared to expected profits,” said Matthews in a note to customers.

Interest rates remain low for now, which is good news for stocks because it means that borrowing is cheap for companies and investors have few other attractive options.

In addition, the vaccine launch and the potential additional government stimulus will trigger a strong recovery in late 2021, he said.