Dow reaches 30,000 at start of transition to Biden, Yellen counts as treasury secretary

The Dow Jones industry average hit a record high of 30,000 on Tuesday, a symbolically significant benchmark in a year made possible by the economic downturn in the coronavirus epidemic and the election cycle with bruises.

The Dow rose just over 400 points Tuesday morning, surpassing the intraday peak. Both the S&P 500 and the Nasdaq Composite rose just under 1 percent.

The Wall Street rally came a day after the Trump administration agreed to begin the transition process for elected president, Joe Biden, and could get millions of dollars in federal funds and other resources to begin the transition to power.

The transition process has stalled for weeks as President Donald Trump’s team fought a dusty legal battle across the country to dispute the results, leaving Biden out of the Covid-19 vaccine and other key issues.

The market hit record highs this month after both Moderna and Pfizer announced promising vaccine candidates in the fight against Covid-19.

Wall Street was also optimistic after former Federal Reserve President Janet Yellen announced likely President Treasury Secretary Joe Biden.

While Yellen faces a huge challenge to get the country out of the epidemic amid millions of job losses and record debt levels, markets have soared during his tenure at the Fed and have decades of macroeconomic experience. During his four-year Fed mandate, Yellen supported the economic recovery by supporting accommodative monetary policy and low interest rates.

In July, Yellen called on lawmakers to renew emergency benefits created in the early days of the pandemic, telling members of an elected subcommittee of the House of the Coronavir Crisis that it would be a “disaster” to extend an additional $ 600 in weekly unemployment insurance. million unemployed Americans.

The additional benefits are a lifeline for the unemployed, Yellen said, adding that on a broader spectrum, “We need the spending that these unemployed workers can realize.”

This market reference has long been awaited. The Dow was within a few percentage points when it reached 30,000 in January. This option seemed like a pan to close when the Covid-19 epidemic led to widespread downtime, job losses, and a fall in gross domestic product. But the Federal Reserve’s aggressive interest rate cuts and optimism in the technology sector spurred stocks, and central bank interventions were accompanied by a rise in valuations of large tech companies increasingly dominating benchmark indices, many of which benefited from the sudden dramatic changes in consumer behavior caused by the pandemic.

“Anytime we have a host Fed, low interest rates, a more accommodative environment, the outlook is good for equities,” said David Frisch, president of Frisch Financial Group.

“Because of the events we’ve been through since March, a lot more people work from home, practically doing things, streaming content online and ordering to come to our homes,” said Sameer Samana, global market strategy at Wells Fargo Investment Institute. In particular, Apple, Microsoft, and Salesforce helped drive the Dow higher.

In addition, emotional dynamics come into play when markets start near symbolic benchmarks. “These high levels usually have a bit of psychology and market sentiment,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

Analysts say investors need to be wary of overcrowding, given it could take months before vaccination is readily available to most Americans.

“Even with the promise of an effective Covid-19 vaccine, we now need to look soberly at the damage the virus has caused to the economy,” said James McDonald, CEO of Hercules Investments, adding that the “return to normalization” should not come immediately.

“It’s impossible to recover overnight, not to mention nocturnal growth that exceeds pre-Covid-19 levels,” he said.