Stocks rally, despite riots in DC, on hopes for stimulus

Wall Street rallied Wednesday on expectations of more stimulus for the economy, though the enthusiasm was dampened by chaotic scenes in the nation’s capital.

The S&P 500 rose 0.6% after having been up 1.5% earlier, while the Dow Jones Industrial Average closed at a record high. Investors piled into stocks of smaller companies, banks and other businesses that would be winners if Democrats push through more economic aid for hurting Americans and businesses. The yield on the 10-year Treasury topped 1% for the first time since March.

The rally lost some momentum Wednesday afternoon after the U.S. Capitol building went into lockdown as supporters of President Donald Trump broke through barricades and entered the building following clashes with police. Both houses of Congress abruptly went into recess, interrupting debate over the Electoral College vote that gave Joe Biden the presidency. Earlier, Trump riled up the crowd with his baseless claims of election fraud.

Stocks got off to a strong start after Democrats won one of the two runoff elections in Georgia. The second race was also called for them later in the day, handing the party of Presidentelect Joe Biden control of the Senate.

Traders largely looked past the unrest that erupted in Washington and chose to look ahead to later this year, when they expect the prospects for the economy to brighten with the rollout of COVID-19 vaccines and the potential for increased spending on infrastructure and other areas under a Biden administration.