Friday was halted by Wall Street! This rare incident took place after the rally that went on for four days. This was the highest weekly gain that Wall street got since April. Stocks are uneven following the rally and investors of Wall Street are hoping that the policies encouraging the business will stay the same. This hope comes from the thin difference in the majority votes that will most likely result in a narrow deadlock.
Current Wall Street Scenario
According to a report, the treasury yields of 10 years had risen from 0.78% to 0.81%. Much to the amusement of the economists, this was because 638,000 more workers were hired in the US by employers as compared to last month, according to the US government. This also reflects the fact that the national economy may be on the uprise, but, on the other hand, the monthly job growth witnessed a slowdown.
The Standard and Poor 500 remained at 7.4% higher, weekly. It was virtually the same in afternoon trading. Earlier it increased to at least 1.2% every day for four days. This happened as gains got accelerated with the chance of no clear winner with a majority in the Congress according to the election predictions. This assured the investors of stable business-friendly policies.
The Industrial Average of Dow Jones at 2:23 p.m was 0.2% at 28,335. This came out after the earlier loss of 200 points got erased.
The Upside and Downside of Joe Biden’s Victory on Wall Street
With the expectations of the Democratic victory in the 2020 Presidential elections, the Treasury yield remained above 0.90%. The reason for this was because Democratic victory meant increased stimulus efforts to boost the economy. But as against this hope, the yet to be declared, electoral results have shown that Joe Biden will only be winning with a small margin meaning that the Republicans will have a considerable amount of seats, the number that is enough to allow the smooth passage of Bidens’s policies.
Now even this has an advantage over Wall Street. With the Republicans in strong numbers, a few harmful measures that could adversely affect the investors can be kept at bay. Things like increased tax rates, or stringent antitrust policies, etc that Democrats were likely to pass which could have a direct impact on the Wall Street investors. Analysts have named this as the ‘Goldilocks’ scenario and the worldwide stocks have surged on it.
However, there is a major downside to this “Goldilocks” scenario as well. The Congress approved support package could be much lower than expected with a divided Washington. This would not have occurred if the Democrats had a clear majority.
Amidst all these theories it is also to be noted that there is no certainty that the Republicans will have any control over the Senate. Even if they win the elections, things will still depend on the runoff elections of January in Georgia which will give rise to a bunch of other theories concerning Wall Street.