The Coronavirus pandemic has had a considerable impact on the economy for the majority of 2020. Lockdowns, stimulus packages, and changes in consumer trends have had a multitude of financial consequences. Businesses around the world have shut down both temporarily and permanently and virtually every sector of the stock market has experienced a downturn. That being said, on Tuesday, November 24th, a significant benchmark was hit by one of the biggest stock market indexes.
The Dow Jones Industrial Average, a widely watched benchmark index in the United States for blue-chip stocks, hit a record high of 30,000 points, a number that has never been broken before. By the time the closing bell rang on Tuesday, The Dow had risen almost 455 points. This 1.5 percent increase put the index at an all time high of 30,046.24 points. The S&P 500 also advanced about 1.6 percent, or 57 points and closed at 3,635.41 while the Nasdaq 100 rose 1.3 percent, or 156 points and closed at 12,036.79 points. Overall, it was a positive day for all 3 of the indexes.
Investors and analysts are contributing this historic close to the announcement by the Trump administration that they would begin the transition process with President-elect Joe Biden. The administration gave Biden millions of dollars of federal funds and a multitude of other resources in order to start his transition to power.
After being stalled for weeks due to President Trump’s legal battles across the country, the commencement of the delayed transition process seems to have rallied investor confidence. Biden’s announcement of treasury nominee, Janet L. Yellen, also contributed to the historic high. Yellen served as chair of the Federal Reserve from 2014 to 2018 and helped the nation recover from the Great Recession. She became the first woman ever to lead the central bank and is also a strong proponent of further stimulus aid. She has pressed Congress to pass another round of emergency funding and also wishes to take a more assertive approach to containing the pandemic. The transition of power and treasury nominee both seem to have further improved investor confidence.
Another possible contributor to the historic high could be the announcement of an approved vaccine by Pfizer and BioNTech in the previous weeks. A successful vaccine could eliminate the possibility of another country wide lockdown and could stimulate consumer spending and allow businesses around the country to reopen. There are also two other vaccines that have experienced positive results from late-stage trials.
While the Dow has reached a historic high, the country is not out of the clear yet. It will take time to administer the vaccine and the markets may still be reacting to the euphoria after the pre-election sell-off. However, hopefully the markets continue to rally as we enter the new year, and the country can come out of the pandemic stronger than we were before.