We can name all sorts of reasons. The holiday retail season was not as bad as feared. Investors tend to be forward-looking, and the debut of multiple coronavirus vaccines points toward an end of the surging pandemic and a return to a more normal life. And many of the market-share gains made by big-business during the pandemic — particularly in e-commerce — are likely permanent.
But most important: Biden will be inaugurated as president on Jan. 20, and he will do so with Democratic control of both the House of Representatives and the Senate. The nation is moving on.
And it appears that investors are not unhappy with the new reality. Concerns about increased Washington regulation and the possibility of higher taxes on the wealthy are canceled out by the likelihood of further economic relief for people and businesses suffering from the impact of the coronavirus pandemic. As a paper released by UBS Global Wealth Management puts it, “On balance, Biden’s policies are likely to add stimulus to the economy.”
No doubt, Trump is taking this personally. He repeatedly — and ridiculously — gave himself credit for the market’s strong performance during his time in office, while almost always going silent when it went down. “Since my election, U.S. stock markets have soared 70 percent,” he said in his last State of the Union address. He was not exactly subtle. “The reason our stock market is so successful is because of me,” he once said, adding that his business smarts and policies such as tax cuts for corporations and the wealthiest Americans, along with a wrecking-ball approach to regulation in areas ranging from the environment to consumer safety, caused the gains.
But as it turns out, these are not the only things that excite investors. These people are not, as Trump would have you believe, enthused only by unnecessary tax cuts and an anti-regulatory agenda. Businesses and investors also value stability — and Trump offered anything but. One moment he was threatening China with a trade war, the next he was best buds with Chinese president Xi Jinping. He claimed he wanted Americans to receive another round of stimulus checks but did nothing to actually make it happen. He attempted to browbeat Jerome H. Powell, the head of the Federal Reserve.
Predicting the future of the stock market is a fool’s game. The same is true for interpreting why it makes the moves — either up or down — it does. But I must admit to a moment of personal satisfaction. In the same way that Trump is seeing the CEOs who once sucked up to him now racing to condemn his presidency, he’s also learning — with every upward tick of the Dow, Nasdaq and S&P 500 — that the stock market was not only not his friend but that it will prosper just fine without him.