Beyond hopes for increased stimulus for the economy from Washington, much of Wall Street expects the rollout of COVID-19 vaccines that's just begun to help daily life around the world get closer to normal. That has investors anticipating a explosive return to growth for corporate profits later this year.
Trump may have backed up investors' expectations that the turmoil engulfing Washington may be only temporary. Shortly after Congress certified his loss, he issued a statement saying there will be an " orderly transition on January 20th." Trump still claims falsely that he won, having appeared to excuse the violent occupation of the Capitol by his supporters. Earlier, Trump riled up the crowd with baseless claims of election fraud.
A report on Thursday showed that the economy remains fragile because of the worsening pandemic, but it wasn't quite as bad as economists expected. Slightly fewer U.S. workers applied for unemployment benefits last week than the week before, at 787,000, when economists were forecasting an increase.
Another more encouraging report said that growth in U.S. services industries accelerated last month and was stronger than economists expected.
Anticipation of more stimulus for the economy, increased U.S. government borrowing and perhaps inflation across the country have been pushing Treasury yields to levels not seen since early in the pandemic. The 10-year yield rose to 1.08 per cent from 1.02 per cent late Wednesday, after topping the 1 per cent level for the first time since March.
Higher interest rates allow banks to make bigger profits from making loans, as would a stronger economy, and financial stocks were again among the market's leaders. JPMorgan Chase rose 3.6 per cent, and Bank of America gained 3 per cent.
Tech stocks also rose, recovering from weakness a day earlier on worries that a Democratically run Washington would target them with tougher regulations. Facebook rose 1.9 per cent, for example, after losing 2.8 per cent Wednesday.
All the ugliness in Washington shows how divided the country is politically. And with the thinnest possible majority possible in the Senate, Democrats may not have enough clout to push through their boldest proposals even if they will also control the White House and House of Representatives.
While raising his forecast for where the S&P 500 will end the year to 4,200 from 4,050, Credit Suisse strategist Jonathan Golub said he's expecting more stimulus for the economy. But he's not anticipating more progressive policies on taxes or regulation that could have disrupted tech, health care, financial, energy and other industries.
In Asian stock markets, Hong Kong's Hang Seng index slipped 0.5 per cent after the New York Stock Exchange reversed again and said it would delist three big Chinese telecoms companies following an earlier order from the White House. The companies are heavyweights in the Hang Seng.
Shares in those companies and Internet companies affected by an expanded ban on transactions with some Chinese companies' apps fell sharply "because of the actions of Donald Trump, trying to hurt China," said Francis Lun, chief executive officer for Geo Securities in Hong Kong.
"Saner heads, people with better reasoning, hope that when Biden becomes president he will try to correct the mistakes that Donald Trump has done in damaging the U.S.-China relationship," Lun said.
Other Asian markets were much stronger. Japan's Nikkei 225 rose 1.6 per cent, South Korea's Kospi gained 2.1 per cent and stocks in Shanghai added 0.7 per cent.
In Europe, Germany's DAX returned 0.5 per cent, and France's CAC 40 rose 0.7 per cent. The FTSE 100 in London edged up 0.2 per cent.
- Associated Press
