Why Wall Street Had a Good Day Wednesday Despite Chaos at the Capitol
When New York City’s Twin Towers fell on Sept. 11, 2001, Wall Street closed. When the stock exchanges finally opened on again on Sept. 17, the longest closing since the Great Depression, the Dow had fallen 684 points, more than 7%. By the end of that week 20 years ago, the Dow was down more than 14%, while the S&P 500 dropped by 11.6% and Nasdaq fell 16%.
In March 2020 when the federal and state governments imposed shutdowns to slow the spread of the novel coronavirus, the Dow fell 26%, or 6,400 points — an unprecedented drop. For perspective, the 1929 stock market crash that set off the Great Depression in 1929 saw the Dow fall 24.8%.
When protestors swarmed the U.S. Capitol today enraged about the Electoral College vote certification, the Dow jumped nearly 438 points to reach an all-time high of 30,829.40. The S&P 500 jumped more than 21 points, a marginal 0.57% gain, and the Nasdaq dropped an equally nominal 78 points, or 0.61%.
While most of us sat riveted to our computers, TVs or social media news feeds to watch the mayhem unravel in D.C., the stock market seemed to ignore the civil unrest. The Dow has been on an upswing for a while now, and the other major indexes barely moved Wednesday.
In spite of some major national events that could lead us to believe otherwise, this is not an unusual market reaction. In general, investors take a long view of the future, and America has recovered from civil unrest, terrorist attacks and other crises in the past. The stock market recovered from its March 2020 dip, and Americans feel optimistic about the prospect of further economic recovery and additional stimulus funds once President-Elect Joe Biden takes office.
And then you have the results of the Georgia Senate runoff, with Democrats Jon Ossoff and Raphael Warnock taking the Senate seats by slim margins to create a majority Democratic Senate and House of Representatives.
Coupled with a Democrat in the White House beginning Jan. 20, the election results could mean more money in Americans’ pockets in the form of additional stimulus payments as well as more coronavirus aid for businesses.
With an eye on what’s to come, sustainable energy stocks, banks and stocks in the retail sector rose. Certain tech stocks traded on Nasdaq, such as Amazon (AMZN), took a dip. Tech stocks could face higher taxes and tighter regulations under Democratic leadership. But overall, businesses are looking forward to increased government aid to spark economic recovery as vaccines continue to be rolled out.
“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,'” said Sam Stovall, chief investment strategist of CFRA, as reported by MarketWatch.
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