Wall Street Unfazed by U.S. Capitol Pandemonium

Wall Street has enjoyed a buoyant 24 hours despite the chaotic scenes in the nation's capital.

The Dow Jones Industrial Average climbed 1 percent in the first two hours of trading on Thursday despite the violent protests that erupted in Washington D.C the previous afternoon.

The index was up 308 points on Wednesday's close at 31,137 as of 10:30 a.m. Eastern time.

The Nasdaq Composite was also up 270 points, or 2.12 percent, at 13,011, while the S&P 500 climbed 55 points—1.47 percent—to 3,803 in early trading on Thursday.

On Wednesday, gains were reported across two of the three most widely followed indexes.

Markets briefly yielded their earlier gains as pro-Trump protesters stormed the U.S. Capitol in an effort to stop Congress certifying the election victory of Joe Biden.

However, with one eye on the two Georgia Senate races that fell in Biden's favor, they quickly rallied.

The Dow Jones gained 1.44 percent and the S&P 500 climbed 0.57 percent at the close of trading on Wednesday, although the Nasdaq Composite fell 0.61 percent, largely driven by fears the Biden administration will take aim at big tech firms.

The gains led some to talk of a disconnect between Wall Street and the political reality, with the president accused of inciting a riot after he urged protesters to "show strength" just hours before they ransacked Congress.

Wall Street sign
The Wall Street street sign is visible against the New York Stock Exchange on December 18, 2020. The pandemic has had long-term repercussions on markets, but the recent political turmoil has had a smaller impact. Noam Galai/Getty Images

However, the markets were looking further ahead to the consequences of the Georgia runoffs, where Democratic candidates unseated two Republicans.

Raphael Warnock and Jon Ossoff claimed victory on Wednesday in a result that will give Biden control of the Senate.

Analysts believe Democratic election successes could herald a more generous economic stimulus package in the months ahead.

Investors anticipate $2,000 checks being offered to most Americans as the country battles the COVID-19 pandemic, as well as an increase in infrastructure spending.

"Not only is there a growing sense of relief among investors that the final election hurdle has crossed, but the markets are slowly coming to terms that this might be the best-case US Senate outcome via a stimulus perspective, complemented by a growing understanding that a Biden administration could make a big difference in coordinating and pushing out a national vaccination strategy that will bring herd immunity in the US much quicker than anticipated," wrote Axi chief global market strategist Stephen Innes in a blog post.

"There's still a lot of wood to be chopped over the next few weeks. Even though we're bearing witness to the market's keen knack of ironing itself out quickly, the most important question now is the sequencing of the Biden policy plan; hopefully, for investors' concerns, it's in order of stimulus, infrastructure and tax changes.

"While Biden could theoretically get the ball rolling and undo many of the Trump tax cuts for corporations and wealthy individuals on day one, I cannot imagine that tax hikes are the priority number one when the current mandate is to rid the US of the virus and get the economy roaring again."