Stocks Rise on Good Political News
U.S. stocks climbed higher Monday amid a more positive view on Washington. The biggest reason was renewed optimism that both sides of the aisle would come together to pass a stimulus bill. House Speaker Nancy Pelosi and Treasury Secretary Steve Mnunchin met yesterday and although no deal was reached, both sides are meeting again today. It could be difficult to get the Republican majority senate to support a deal, but President Trump’s support means some form of stimulus will likely pass.
The second positive political force on the markets yesterday was improved feelings over Trump’s health. The president left the hospital yesterday, and although he will still be treated in the White House, his release boosted Dow futures.
Finally, markets seemed to respond positively to Biden’s gains in the polls following last week’s debate. Analysts from JP Morgan and Citibank announced they see a clear-cut Biden win as the best-case scenario for stocks. The messy legal battles that could follow a close election have many investors nervous.
Goldman Sachs believes the best November result for the economy would be a Democratic sweep of Congress and the White House. The investment bank believes higher spending on healthcare, infrastructure, climate and education will boost the economy more than higher upper-income and corporate tax rates will slow it down. It is also likely that future stimulus bills will be larger in a “Blue Wave” scenario than any alternative.
The situation in Washington continues to shift by the day. Even if you aren’t interested in politics, a good investor should keep their eye on Washington because the next month will have large consequences on Wall Street.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
