Since the presidential election two weeks ago, the financial markets have stabilized and are steadily moving in a positive direction. The stock market has been on the rise over the past two weeks as Pfizer, Moderna, and BioNTech have all recently made announcements that their COVID-19 vaccines are over 90% effective and will likely receive emergency approval over the next few weeks. The market has also reacted favorably to the notion of a Democratic President being kept in check with a congress that has a slight Republican majority. The Dow Industrial Average closed today at 29,483.23, up 6% since the election and 3% year-to-date.
Interest rates have remained at all-time lows. The Federal Reserve continues to calm the market by telegraphing its intent to keep interest rates low for the next couple of years while the economy recovers from the effects of COVID-19. Also, the current international spiking of COVID-19 cases has caused bond investors to continue acquiring bonds at their record-setting low yields as a “safe-haven” investment. The benchmark 10-year Treasury closed today at 0.842%, down .93% from a year ago.
There still are a number of questions and concerns that are weighing on the financial markets which may cause volatility until they are resolved. These are some of the questions and concerns:
- How long will it take to deploy the COVID-19 vaccines and how effective will they be? With a new spike of Covid-19 cases internationally this question has become a major focus for the financial markets.
- When will President Trump acknowledge incumbent President Biden’s Presidency? The fact that Trump has not acknowledged Biden’s victory has stalled the typical transition process that an incoming President would go through.
- Will a new democratic president in office change pro-business tax laws that were enacted by the Trump administration?