Markets throw a welcome party of sorts for Joe Biden

A day after the Trump administration effectively acknowledged the election of Joe Biden, investors showed their relief by pushing the two major stock market indexes to record highs on Tuesday.

It was a welcome party of sorts for Biden, but what investors were really embracing was the end of uncertainty. Biden has vowed to push for more stimulus to bolster the economy. His selection for Treasury secretary, Janet Yellen, is well known from her days as Federal Reserve chair. And several new coronavirus vaccine candidates mean that the pandemic could be under control in the months ahead.

President Donald Trump, who on the campaign trail had warned that Biden’s election would lead to stock market armageddon, on Tuesday implied that the day’s highs were his own doing, making an unscheduled stop at a White House briefing to play up the latest gains in the Dow Jones Industrial Average.

On Wall Street, the S&P 500 stock index rose 1.6% to a new high of 3,635.41, while the Dow rose 1.5%, closing above 30,000 for the first time.

“We have an enormous amount of certainty that we didn’t have just a few months ago,” said Kristina Hooper, chief global market strategist at Invesco, an investment management firm.

The good news about vaccines has bolstered stocks that had been hit hard by the outbreak. Stocks of airlines and oil companies have soared this month. United Airlines, American Airlines and Delta Air Lines have all climbed by more than 30 per cent. The oil giant Chevron is up nearly 38 per cent.

Markets also appeared to welcome the return of politics as usual under a future Biden administration, and were reassured by the news that Yellen will be Biden’s nominee to head the Treasury Department. She is a known quantity on Wall Street, well respected for her steady leadership at the head of the central bank, from 2014 to 2018.

“There had been some fear that Biden would pick a Treasury secretary with a strong anti-Wall Street bias,” wrote analysts with High Frequency Economics in a client note on Tuesday. “Janet Yellen isn’t that.”