Biden Victory Expectations... New York Stock Market Surges for Two Consecutive Days

by Paek Jongmin

Published 06 Nov.2020 07:23(KST)

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market experienced significant gains for two consecutive days following the U.S. presidential election. The dollar fell sharply for two straight days.

[Image source=Reuters Yonhap News]

On the 5th (local time), the Dow Jones Industrial Average rose 542.52 points (1.95%) to close at 28,390.18, the S&P 500 index increased by 67.01 points (1.95%) to 3,510.45, and the Nasdaq index surged 300.15 points (2.59%) to finish at 11,890.93.

Although the winner of the presidential election was still undecided that day, the market reflected the high likelihood of Democratic candidate Joe Biden’s victory.

The Washington Post (WP) reported that the stock market’s reaction reflected the best-case scenario expected after the election. WP noted that historically, the highest stock market gains occurred when a Democratic president was elected and the Republicans held the Senate majority, which the market paid close attention to.

Reflecting Biden’s policy of expanding fiscal spending, the dollar index, which measures the dollar’s value against major currencies, fell sharply by 0.92% to 92.552.

As the dollar’s value plummeted, gold prices soared. December delivery gold rose 2.7% ($50.60 per ounce) from the previous day to close at $1,946.80 per ounce. This was the highest price in seven weeks since September 18.

The Trump administration firmly decided to respond with lawsuits, including requests for recounts and injunctions to stop vote counting in battleground states, but they could not stop the soaring stock market.

The Federal Open Market Committee (FOMC) announcement released during the trading session had little impact. As expected, the Federal Reserve (Fed) made no changes to interest rates or asset purchases.

The Fed’s statement gave a somewhat more negative assessment of the current economic situation compared to September. It also emphasized the need for Congress and the government to prepare economic stimulus measures. Chairman Powell mentioned that discussions about asset purchases took place and insisted that the Fed still has ammunition left.