Wall Street Close: S&P crosses above 3800 for the first time
- Stocks rallied on Thursday as markets continue to price in more fiscal stimulus.
- The S&P 500 rallied above 3800 for the first time.
- Tesla overtook Facebook in market cap and Elon Musk is the world’s richest man.
The S&P 500 closed with gains of around 1.5%, the Dow Jones Industrial Average with gains of 0.7% and the Nasdaq 100 with gains of just over 2.5%. Driving the gains was the continued tailwind of imminent fiscal stimulus after the Democrats won control of Congress after Tuesday’s Senate elections in Georgia. Goldman Sachs expects another fiscal stimulus package worth $750B to be passed in February, which they think will send the US economic recovery into “overdrive”.
The Nasdaq received additional tailwinds from the outperformance of some of the big Tech names that underperformed on Wednesday, seemingly on regulation concerns at the time given the Democrats winning control over Congress.
Apple gained 3.41%, Microsoft 2.85%, Google 2.99% and Facebook 2.06%. Perhaps markets are taking the view that the very slim majority that the Democrats hold in the Senate will prevent some of the curb any coming regulatory or corporation tax changes. In other words, the Democrats will only be able to pass laws that get the nod from all Senate Democrats, including the “moderates”.
Stock markets may be seeing Tuesday’s Senate election outcome as the “sweet spot”; a slim Democrat majority that will be enough to pass significant further fiscal stimulus (which stock markets love), but may struggle to pass some of the more draconian regulations that would hurt stock market valuations.
Amid the euphoria that saw the S&P 500 rally above the 3800 level for the first time, markets seemed to have forgotten all about scenes in Congress on Wednesday, when the building was stormed by an angry pro-Trump mob. Indeed, as it should have done yesterday if it weren’t for the interruption, Congress certified the November 2020 Presidential election on Thursday, and US President Donald Trump is largely banned off of social media.
Tesla surpasses Facebook in market cap, and Musk becomes world’s richest man
Tesla’s market capitalisation surpassed $765B on Thursday, meaning that it is worth more than Toyota, Volkswagen, Hyundai, General Motors and Ford combined, as well as now being worth more than Facebook. Traders are attributing the surge in Tesla’s stock price (which was up nearly 8% on Thursday, handing the stock gains of nearly 16% already on the year, to this week’s Democratic victory which has handed the part control over Congress. The Democrats are expected to pursue more environmentally friendly policies that are likely to benefit the electric car maker.
Elon Musk, CEO of Tesla, is now the world’s richest man according to the Bloomberg billionaires index. As of 10:15GMT on Thursday, Musk’s net worth had surged to $186B, above Amazon CEO Jeff Bezos’ net worth of $184.5B. Bezos had held the top spot on the index since October 2017.