Investors on Wall Street didn’t panic Wednesday even as protestors backing President Donald Trump stormed the Capitol and put the building into lockdown. Stocks pared some of their earlier gains, yet the Dow and S&P 500 still soared to all-time highs.
Spartan Capital Securities chief market economist Peter Cardillo said Wall Street looked past the chaos in Washington toward Georgia, betting that a Democratic sweep in that state – which delivers Democratic control to the Senate - will lead to more fiscal stimulus and infrastructure spending.
“I’m just mesmerized at this. I can’t believe what’s going on in the marketplace after what’s taking place in Washington. I mean, here we have the Capitol under siege, we have the President of the United States who delivered to his supporters a very defiant speech saying that he would never concede to an illegitimate president. Yet the market is ignoring this. I want to think that maybe the market investors think well, this is going to blow over by the end of the day and that, you know, president, President-elect Biden will be certified by Congress and we look forward to more stimulus and perhaps a big infrastructure deal.”
A Democrat-controlled Senate typically ushers in increased fiscal spending but raises the chances of tax hikes and tighter regulation.
And so, tech stocks fell as investors flocked to economically sensitive sectors such as financials, materials and energy stocks.
That drove the Dow up nearly one-and-a-half percent and the S&P 500 up more than a half percent. But the Nasdaq fell almost two-third percent.
The potential for Democratic control of Congress also sent the yield on the benchmark 10-year Treasury above 1% -- a level not seen since March.