Stocks rallied to record highs on Wall Street as traders hoped that new leadership in Washington will mean more support for the economy, which is still reeling from joblessness and business closures because of the pandemic.
The S&P 500 rose 1.4% Wednesday. Joe Biden took the oath of office to become the 46th U.S. president, and he has already pitched a $1.9 trillion plan to help American families and businesses.
The hope is the additional stimulus will help carry the economy until vaccinations get daily life closer to normal later this year. Treasury yields rose. Netflix soared after passing 200 million subscribers.
“Most of Wall Street is assuming that the second half (of 2021) is when we will see pent-up demand start to show up in the economy, and that will push economic indicators higher and will likely cause a ramp up in earnings projections,” said Sam Stovall, chief investment strategist at CFRA.
Gains for stocks have also been accelerating since Biden’s election, before his inauguration, on enthusiasm about COVID-19 vaccines and hopes that he and Congress can deliver more stimulus for the economy. The bump for stocks between the most recent Election Day and Biden’s inauguration is bigger than former President Donald Trump’s bump before his inauguration.
“The market is up more than 13% since Election Day,” Stovall said, noting that since World War II, the S&P 500 has risen an average of 3.5% in the first 100 days of a Democratic president’s administration, versus an average gain of 0.5% when a Republican was in the White House.
Janet Yellen, Biden’s nominee to be Treasury secretary, told the Senate Finance Committee during her confirmation hearing Tuesday that the new administration would focus on winning quick passage of its $1.9 trillion plan.
“More must be done,” Yellen said. “Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later.”
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