The stock market boomed despite the chaos in the nation’s capital – with observers saying that future stimulus and tax policies may be reasons why.
The S&P 500 index that measures the stock performance of 500 large companies in the US closed at an all-time high on Wednesday at the news that Georgia will have two new Democratic Senators and the confirmation that Joe Biden will be next President.
This is yet another hit to President Trump, who spent much of his presidency bragging about the state of the stock market, and now faces another round of impeachment hearings and renewed calls for his removal even before the end of his term on January 20.
Peter Tchir of capital market company Academy Securities told CNBC that the chaos in Washington was a “one-off situation”.
“This as an isolated event as opposed to some sort of bigger movement, and because of that we can look to the new government and to stimulus,” he said.
He said the movements in the market was “a sure sign the market is betting on stimulus and some change in tax policy. The market is looking forward to earnings and growth down the road”.
The head of trading and financial services company Baird, Jack Miller, told CNBC that “It is a bit hard to reconcile all the different forces at play, but ultimately it seems like the election is carrying the day”.
Stocks that would benefit from stimulus were up 2%-4%, now that Democrats will control the White House and both chambers of Congress.
Sam Stovall, the chief investment strategist at investment research firm CFRA, told MarketWatch that “No matter the political consequences of today’s takeover of the Capitol, Wall Street continues to be encouraged by the economic-enhancement possibilities of a Democratic ‘trifecta’”.
Tech stocks are down because of fears of new laws and higher taxes on capital gains. Mr Tchir said that while raising taxes on regular people would be controversial for the incoming Administration, “raising capital gains taxes on rich people will generate far less controversy. I’m not sure the public will be upset with that”.