SHOCK EXCHANGE
Dow hits high amid DC chaos
The Dow Jones Industrial Average closed at an all-time high on Wednesday as investors brushed off the madness unfolding in DC to focus instead on the prospect of more stimulus funding to boost the economy.
The Dow ended the day up 437.80 points, 1.4 percent, to a record 30,829.40. Earlier in the day it had soared even higher, by more than 600 points, before falling back somewhat as a mob of Trump supporters stormed the US Capitol to protest Joe Biden’s Electoral College win.
The S&P 500 ended the day up 0.6 percent to 3,748.14 after also hitting an intraday record.
Investors were buoyed throughout the day by signs that the Georgia runoff elections would put Democrats in control of the Senate, clearing the way for Congress to OK more coronavirus stimulus to suffering Americans and small businesses.
Democrats cinched control of both chambers of Congress on Wednesday afternoon after Jon Ossoff, 33, was declared the winner of his Senate race, unseating GOP incumbent David Perdue. Rev. Raphael Warnock had been declared a winner in his race against Republican Sen. Kelly Loeffler hours earlier, at around 2 a.m.
Investors managed to remain focused on what that might mean for the economy even after the Capitol was breached by a mob that pushed past police into the building where Vice President Mike Pence and hundreds of lawmakers were assembled certifying the electoral vote.
Explosive devices were found and a woman was shot dead.
“A lot of dark days for America have been steady for the stock market,” explained George Pearkes, global macro strategist for Bespoke Investment Group. “You need more than something like this to shake the implicit theory of the market.
“If a church burns down, that doesn’t make everyone in the church an atheist,” mused Pearkes. “It takes more than one bad day in Washington. And this was one very bad day.”
Only the Nasdaq closed down for the day, falling 0.6 percent to 12,740.79 on fears that a Democratic-controlled Congress could lead to calls for more regulation. Tech stocks could also face greater competition from beaten-down cyclical stocks as the economy recovers.
Bank stocks, meanwhile, soared to life on hopes that higher interest rates will help boost their coffers. The yield on 10-year Treasury bonds climbed above 1 percent on Tuesday. Wells Fargo rose 7 percent to $32.69 a share while Bank of America popped 6 percent to $32.15 a share.
But the biggest winners on Wednesday were pot stocks, on hopes that the Democrats might be
more amenable to the legalization of marijuana, giving the industry access to banking and new forms of capital.
“It’s all about Georgia,” said Matt Karnes of cannabis-research firm GreenWave Advisors. “Momentum is building and it’s evident that legalization will happen sooner than later.”
Shares in Canadian marijuana producer Tilray soared more than 24 percent before closing up 13 percent to $10.77. In after-hours trading, it soared another 8 percent.
Edmonton-based Aurora Cannabis popped 15 percent before closing up 5.9 percent to $10.27 a share. Ontario’s Canopy Growth shot almost 16 percent higher before ending up nearly 12 percent to $30.17 a share.