What Capitol chaos and rioting rancor? The S&P 500, Dow Jones Industrial Average and Nasdaq Composite Index all set new records Thursday after the overnight certification that Joe Biden will be inaugurated the 46th U.S. president on Jan. 20.
Unification of government outperformed the unbelievable unrest.
The Nasdaq recovered from early-week losses and jumped 2.56%, while the Dow Jones hit 31,000 for the first time ever and the S&P took a 1.48% bump. Just as the stock market shrugged at the astonishing scene of rioters’ destruction at the evacuated Capitol, analysts did too.
“I think most feel this is more of a one-off situation, that this was 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,” Academy Securities’ Peter Tchir told CNBC. “Look at the small-cap Russell 2000. It was up 4%. The Nasdaq 100 was down 1%. That is 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.”
Jack Miller, head of trading with Baird, told CNBC that “the election is carrying the day.” Some believe that the presidential change will lead to more stimulus relief that benefits cyclical industries. Technology and financial stocks remained the pacesetters on a greater scope.
Tech stocks are what could be affected most in the new administration because of the focus on capital gains. A long-term capital-gain rate for millionaire earners would affect stock owners, including many who delve mostly in the tech world. Such taxes will bring far less controversy than a broader tax at a time of financial struggles for many.
But with Senate control shifting, an emphasis on stimulus relief may come ahead of a set tax policy.