Stocks rise on Wall Street after Congress blesses Biden win

Thursday, January 7, 2021 | The Associated Press


A man walks past an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo Thursday, Jan. 7, 2021. Shares rose in Asia on Thursday after Wall Street rallied on expectations of more stimulus for the economy, despite chaotic scenes in Washington as Trump supporters stormed the U.S. Capitol. (AP Photo/Eugene Hoshiko)

NEW YORK (AP) — Stocks are getting back to rallying on Wall Street after Congress, in a late-night session, certified Democrat Joe Biden’s Electoral College victory. The S&P 500 rose 0.8% in the early going Thursday, on its way to another record high. The vote in Congress had been interrupted when a mob loyal to and encouraged by President Donald Trump broke into the U.S. Capitol, forcing lawmakers to evacuate. Investors have largely looked past the chaos and anticipate that with both houses of Congress now in Democratic control, Washington will be better able to push through more support for the U.S. economy.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Global shares rose Thursday after Congress certified Democrat Joe Biden’s Electoral College victory following unprecedented chaos when supporters of President Donald Trump ran rampant through the U.S. Capitol.

The formal recognition of Biden as president-elect on Thursday has raised expectations his administration, helped by control of both houses of Congress, will push ahead with more generous support for the U.S. economy.

Shortly after Congress certified his loss to Biden, President Donald Trump issued a statement saying there will be an “orderly transition on January 20th.” Trump still claims falsely that he won, having appeared to excuse the violent occupation of the Capitol by his supporters on Wednesday. Earlier, Trump riled up the crowd with baseless claims of election fraud.

U.S. futures rose, auguring a strong start for Wall Street. The future contract for the S&P 500 gained 0.6% while the future for the Dow industrials added 0.5%. Germany's DAX climbed 0.3% to 13,937.17, while the CAC 40 in Paris advanced 0.4% to 5,651.03. In London, the FTSE 100 fell 0.4% to 6,811.29.

Investors expect that Democratic control of both houses of Congress, after Democrats won two runoff senatorial elections in Georgia, has raised the potential for increased spending on infrastructure and more aggressive action to fight the pandemic under President-elect Joe Biden's administration.

With pandemic restrictions being reinstated in many places as coronavirus caseloads rise amid faltering rollouts of COVID-19 vaccines, economists and investors have been clamoring for more economic aid for Americans and businesses. A strong U.S. economy is needed to help drive a global recovery from the worst downturn in decades.

“What will matter most this year is the vaccination rollout and the ability to achieve herd immunity and more government spending. On the first point, President-elect Joe Biden is likely to aggressively accelerate the rollout from Jan. 20, which is positive for risk," Stephen Innes of Axi said in a commentary.

Asian shares were mostly higher throughout the day.

The Nikkei 225 index in Tokyo gained 1.6% to 27,490.13. The Shanghai Composite index surged 0.7% to 3,576.20. South Korea's Kospi jumped 2.1% to 3,031.68 and the S&P/ASX 200 in Australia advanced 1.6% to 6,712.00. India's Sensex rose 0.1% and shares in most other markets were higher.

Hong Kong’s Hang Seng index slipped 0.2% to 27,648.36 a day after dozens of pro-democracy figures were arrested under a national security law imposed by Beijing.

Shares in Hong Kong also were pulled lower after the New York Stock Exchange reversed an earlier decision not to comply with an order from the White House to delist three big Chinese telecoms companies. The companies are heavyweights in the Hang Seng.

China Telecom Hong Kong-traded shares dropped 8.9%, China Mobile's shares sank 7.3% and China Unicom plunged 10.6%.

Shares in those companies and Internet companies affected by an expanded ban on transactions with some Chinese companies' apps fell sharply “because of the actions of Donald Trump, trying to hurt China," said Francis Lun, chief executive officer for Geo Securities in Hong Kong.

“Saner heads, people with better reasoning, hope that when Biden becomes president he will try to correct the mistakes that Donald Trump has done in damaging the U.S.-China relationship,” Lun said.

Overnight, the S&P 500 rose 0.6% to 3,748.14. The Dow gained 1.4%, to 30,829.40, a record high. The Nasdaq composite, which is full of tech stocks, fell 0.6% to 12,740.79.

The Russell 2000 index of small-cap stocks surged 4%, to 2,057.92, a record high. Another round of stimulus for the economy could benefit smaller companies in particular because they tend to have smaller financial cushions to survive long-term downturns.

Traders have largely chosen to look past the unrest and ahead to later this year, when they expect the prospects for the economy to brighten, analysts said.

A much worse than expected jobs report on Wednesday underscored the fragility of the U.S. economy due to the worsening pandemic. Payroll processor ADP said private employers cut 123,000 more jobs last month than they added, the weakest such report since April. The Labor Department's more comprehensive report on jobs growth is due on Friday.

Big spending plans for the economy could trigger not only stronger growth for the economy in the future but also heavier borrowing by the U.S. government and maybe even inflation. Those factors helped push up Treasury yields, and the yield on the 10-year Treasury ticked up to 1.06% from 1.04% late Wednesday, having surpassed 1% for the first time since March.

Democratic control of Washington could also lead to higher tax rates for businesses, which would crimp profits and add downward pressure on stocks broadly. But analysts say that given how slim the Democratic majority may be scope for major change is limited. The party will have a 50-50 split in the Senate with Democratic Vice President-elect Kamala Harris providing a tie-breaking vote.

In other trading, U.S. benchmark crude oil gained 37 cents to $51.00 per barrel in electronic trading on the New York Mercantile Exchange. It rose 70 cents to $50.63 per barrel on Wednesday.

Brent crude gained 27 cents to $54.57 per barrel.

The U.S. dollar rose to 103.36 Japanese yen from 103.01 yen on Wednesday. The euro weakened to $1.2306 from $1.2326.

___

Associated Press reporter Alice Fung contributed.

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