Global stocks gained as investors looked beyond the chaos in Washington and towards the prospect of further stimulus spending in the
NEW YORK (Reuters) - Bond prices dropped and stocks hit record highs on Thursday as investors bet Democratic control of the U.S. Congress would enable President-elect Joe Biden to borrow and spend heavily, while higher yields helped a bruised dollar recover from near three-year lows.
The bullish sentiment remained throughout the day even as the top two Democrats in Congress called for President Donald Trump to be removed from office, one day after his supporters stormed and vandalized the U.S. Capitol in a rampage that left four people dead.
U.S. Treasuries prices extended their steepest sell-off in months, with the benchmark yield at its highest in 10 months. Victories in two Georgia races handed the Democratic Party narrow control of the U.S. Senate, bolstering Biden’s power to pass his agenda with his party controlling both chambers.
After a shaken Congress formally certified Biden’s election victory in the early hours of Thursday, Wall Street focused on the implications of the Democrats’ control of Congress. Major indexes hit record highs on bets that more pandemic stimulus will help the economy ride out the downturn.
“The market is now looking past Trump and it’s looking forward to a Biden presidency, more structure and stimulus,” said Dennis Dick, a trader at Bright Trading LLC.
The Dow Jones Industrial Average rose 211.73 points, or 0.69%, to 31,041.13, the S&P 500 gained 55.65 points, or 1.48%, to 3,803.79 and the Nasdaq Composite added 326.69 points, or 2.56%, to 13,067.48.
Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan had risen 0.35% and Japan’s Nikkei hit its intraday highest since 1990 before ending up 1.6%.
The prospect for future stimulus spending sent bond prices lower, with the yield on the benchmark hitting its highest since March. It rose as high as 1.088% on Thursday.
“The Georgia Senate elections just added a tailwind to existing trends of reflation and upward pressure on Treasury yields,” said Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis.