Stock market surges as Biden is inaugurated president
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The stock market surged to as Joe Biden became president in a record leap for Inauguration Day.
The S&P 500 saw a 13 per cent gain on Wednesday, the best increase seen for any president since 1952.
The second best gain was 8.8 per cent, which occurred on John F Kennedy's inauguration day.
Morgan Stanley chief U.S. equity strategist Michael Wilson told CNBC that the surge was likely responding to the change of political leadership in the face of coronavirus, which has devastated the US economy over the last year.
“The political environment has changed dramatically. It’s just been three months. It’s been kind of a drum beat and that’s not going to reverse,” Mr Wilson said. “We said, ‘Look, the policy response this time around is going to be gargantuan because it’s a health crisis and that’s only going to continue further with the political change in Washington, but that’s all good for growth and rates could go up in a nonlinear fashion.’”
Mr Biden has already proposed a $1.9-trillion relief package to address the pandemic, and has committed to ramping up vaccination programmes across the country.
Although that relief plan will likely be reduced after negotiations with Republicans, market strategists expect a second round of assistance in March that will be aimed at job growth, a necessary measure to repair the damaged economy.
Scott Wren, a senior market strategist at Wells Fargo, told CNBC he also attributed the surge to confidence in Mr Biden's ability to handle the obstacles presented by the coronavirus.
“The economic numbers have been coming in better than expected ... The vaccine logistics and news has been better than expected,” Mr Wren said. “We’re not expecting these lockdowns in states like California and New York to go on endlessly.”
Some market analysts have urged caution, however, claiming the surge may be overlooking significant obstacles to economic recovery.
Both retail sales and weekly jobless reports have worsened in recent weeks.
The US Department of Labour is expected to release a new jobless report on Thursday containing grim news.
Initial jobless claims on the week ending 16 January reported 935,000 expected new jobless claims, down slightly from 965,000 the week before.
Unemployment claims reached a five month high during the week ending 9 January, with a high of 965,000.
Brett Ryan, senior US economist at Deutsche Bank, said coronavirus-related disruptions would likely result in a minimal jobs gains for January.
“While we expected initial claims to retrace some of last week’s unexpectedly large increase, job gains in January may be minimal given ongoing Covid disruptions,” Mr Ryan told Yahoo Finance.
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