U.S. President-elect Joe Biden will be inaugurated as the 46th President of the United States on the 20th (hereafter local time). The market is paying attention to how the Biden administration’s COVID-19 quarantine and $1.9 trillion stimulus plan will bring about an economic recovery.
Since Biden’s election, the market has continued to rise, and since November 3, last year (the date of the presidential election), the market’s return has increased by about 13% based on the Standard & Poor’s (S&P) 500.
This is the highest in the period between election and inauguration, CNBC said, citing data from US market research firm CFRA. Broadcasting pointed out that “Biden-elect has started his term of office with the biggest stock market boom since 1952.”
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Among the presidents who saw the highest share price index between elections and inauguration ceremonies in the past were former President John F. Kennedy (8.8%), former President Dwight Eisenhower (6.3%), and President Donald Trump (6.2%).
In the background of such a sharp rise in the stock index, there is a large-scale stimulus plan by Biden-elect. Earlier, Biden-elect announced plans to implement a $1.9 trillion stimulus package. Investors are paying attention to whether this ambitious stimulus bill can pass through Congress.
It is closed on the 18th, but the results of major companies such as Bank of America, Goldman Sachs, and IBM are scheduled to be announced this week. In addition to stimulus, how well the Biden administration will control the pandemic is likely to have an impact on the stock market.
Economic indicators that have recently weakened are also a problem. Quincy Cosby, chief market strategist at Prudential Financial, pointed out that “the market is paying attention to the efficient distribution of the COVID-19 vaccine (in a situation where economic indicators deteriorate).” It was found that the market is not yet very concerned about the recent unrest in the domestic political situation. Strategist Cosby pointed out, “Of course, the premise is that the intrusion to the Capitol will end as a one-time incident. If this trend expands, the situation will change.”
The mayor also believes that the size of the Biden administration’s stimulus package could be somewhat reduced through parliament.
Raymond James’ policy analyst Ed Mills in Washington predicts that the size of the stimulus could go down to a trillion dollars. This is the scale of the stimulus package discussed by House Speaker Nancy Pelosi and Finance Minister Steve Manusin in the past. It is an analysis that it is difficult to pass the current plan while the gap between the two parties is large.
Historically, the stock market often rose in the early days of the Democratic Party. During the 100 days of the Democratic Party’s rule since 1952, the average share price increase rate reached 3.5%. For Republicans, it was only 0/5%. After World War II, the S&P500 also rose by 11.3% in the first year of the Democratic Party, but 5.7% in the first year of the Republican Party.
The stock market is expected to pay attention to the trend of the bond market. The U.S. Treasury yield rose to 1.18% due to the recent anticipation of rising inflation, the highest since March. After the deteriorating economic indicators on the 15th, it fell back to 1.08%.
The foreign media pointed out that if interest rates rise rapidly, growth stocks may be subject to adjustments for the time being.
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