Stocks soar as Wall Street looks beyond the violence in Washington

For forward-looking investors, the Democratic sweep in the Senate, which gives the party control over the White House and Congress, has been the main news in recent days. Control over all three branches of government gives the agenda of the new Biden administration an advantage, and it could mean faster and more generous additional stimulus measures to get the economy back on track.

That news outweighed the shocking images of rioting Trump supporters storming the Capitol building on Wall Street. The Dow climbed past 31,000 points on Wednesday for the first time in history and closed at a record high.

The optimism on Wall Street is not a total surprise. Historically, US stocks have remained unmoved by civil unrest as long as the turmoil does not have a tangible impact on earnings or economic growth.

If the market closed at the current level, the Dow would record its first finish above 31,000 points and the Nasdaq would close above 13,000 points for the first time in history.

But anyone worried that stocks may rise too quickly for their own good can take a breath, said Thomas Mathews, market economist at Capital Economics. “We still don’t think stock prices seem too high in relation to expected earnings,” Matthews said in a note to clients.

Interest rates will remain low for now, which is good news for stocks, as it means borrowing is cheap for companies and investors have few other attractive options.

In addition, the roll-out of vaccines and possible additional government incentives will trigger a strong recovery later in 2021, he said.