In the days following the recent victory for Joe Biden in the presidential election, the stock market displayed optimism by yielding numbers of a complete surge in all sectors. Noted in an article published by the Wall Street Journal, after trade reopened Monday morning following Saturday’s news of Biden’s victory, The Dow Jones Industrial average experienced a 4.8% point increase, the S&P 500 surged 3.3% and the NASDAQ market rose by 60 points.
While a common belief existed that re-electing President Trump would put the stock market in a better place, numbers have still soared with Biden taking office. Why? Well, the stock market’s success can be credited to a few reasons.
In the eyes of CNBC’s financial news broadcaster Jim Cramer, Joe Biden as president in addition to a Republican-controlled Senate would be “nirvana for the stock market.” Cramer believes that Joe Biden brings a lot more stability in comparison to President Donald Trump. With Biden as president but a Republican senate, Washington D.C. will stay far more uninvolved in the market than previous years. Cramer inferred that the federal government day-to-day operations will focus a lot less on the stock market, and that this would be good for investors because stock price would have a tighter relationship with company earnings and productivity as government influence would exist as way less of a factor.
Another reason stocks started booming is because, since the Senate remains Republican, the tax plan many investors feared would be imposed by Joe Biden probably will not actually be implemented since Congress will not allow the plan to be passed. As a result, people will hold onto more of their earnings, leaving them with extra money to save and invest into the stock market.
One other reason that also played a factor in the market’s recent success lies in the breaking news of extremely positive information about an up-and-coming COVID-19 vaccine. According to the same Wall Street Journal article, the Pfizer and BioNTech partnership to create a vaccine recently yielded groundbreaking results with excellent feedback on the vaccine’s application. A pivotal study showed that the vaccine continued to work in numerous patients, and that the treatment was safe and did not yield any negative side effects. With a sneak peak of putting an end to the pandemic that has shattered so many economies, the markets surged in expectations of future prosperity. Stocks like Carnival Cruiselines surged 37%, American Airlines went up 17% and more.
Overall, the stock market seems to be in a good spot right now with Biden’s victory, a Senate remaining Republican majority and a vaccine yielding positive results.