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On Wednesday, markets had two big surprises. The first was the Democratic victory in both of Georgia’s Senate seats, surprising many analysts who weren’t expecting it.
But the big surprise was Joe Biden’s ratification as president of the United States before Congress, as a mob of Donald Trump supporters invaded the Capitol to protest what they believed was a fraudulent election, preventing Congress from confirming Biden as president of the United States.
The Capitol had to be completely closed, the secret service killed a woman who entered the vicinity, the congresspeople were secured and wore gas masks, and the mob was dispersed with pepper spray.
Both President-elect Joe Biden and President Trump had to call the American people to order in the face of such a situation. In his speech, Trump claimed that the election was stolen from him and asked Vice President Mike Pence not to accept Biden’s nomination, to which Pence responded that he could not change the election results.
President-elect Joe Biden accused Trump of wanting to stay in power and asked him to resign. Given the seriousness of the events, a curfew was declared in the capital from 6 p.m. to 6 a.m.
The event was unique in the history of the United States, the protesters were able to enter the lower house and congressional offices where pictures were taken and symbols of American democracy were ridiculed.
In the face of such a unique event, it is not superfluous to ask how the markets reacted to the Capitol Hill riots at the confirmation of a president in the United States history.
How did the markets react?
The Dow Jones Industrial Index and the S&P500 closed higher as investors saw a Democratic victory as a step toward greater fiscal stimulus and infrastructure spending in the future.
But Wall Street halted this trend, and Nasdaq closed lower after the announcement that thousands of people had broken into the Capitol. According to Tim Ghriskey, chief strategist at Inverness Counsel, “it was not a sharp decline.”
Prior to the pro-Trump protests, the nation’s leading financial indicators, such as the Dow Jones, reached record highs and remained high despite a slight decline from the riots.
Although some political analysts claim that the United States is facing a constitutional crisis, investors seem confident that events on Capitol Hill will not affect the long-term trend in the American economy.
It seems that the markets today were more interested in the events of the Georgia election which meant that the Democratic Party will control both the lower and upper houses of Congress.
The market’s long-term expectations will depend more on decisions about the new stimulus package and its amount than on this event, which is an anomaly whose impact on the future of American politics is still uncertain.
In November, most investors were undecided about which scenario would best suit the markets, a Republican-majority Senate, or Democrats controlling both houses. Even with control of both houses, investors expect the more moderate wing of the Democratic Party to control the agenda of its progressive wing.
The energy, banking, financial, and technology sectors are expected to behave with rising prices during 2021. The behavior of the markets shows that, despite the unprecedented events seen today, investors see the Capitol’s takeover, so far, as a contextual event and remain optimistic about the economic recovery of the United States.
Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica