The Dow Jones Industrial Average closes at a record high as chaos descends on Washington. Here’s why.

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There is a mob in Washington, DC, preventing Congress from certifying the results of the presidential election. The Capitol building was evacuated and the prospect of further violence hangs over the city.

The stock market barely recognized the chaos.

Yes, the major indices are off their peaks. the

Dow Jones industrial average,

once up over 600 points, ended the day up 437.80 points, or 1.4%, to 30,829.40, a record close, while the

Russell 2000,

which rose 4%, also ended the day at a record high. the

S&P 500

closed up 0.6%. Only the

Nasdaq composite,

0.6%, closed the same day.

It’s a question that comes up all the time: why isn’t the market responding to something that scares so many of us? And the only answer I can give is that the market, while responding to the emotions of human beings, does not react to events that do not seem to affect the economy. And this one doesn’t.

Even gold, which is expected to rise if investors are worried, cannot find a supply. “The market is doing what it’s supposed to do,” said Quincy Krosby, chief market strategist at Prudential Financial, noting that the precious metal fell 1.7%. “The market says it thinks it will be OK.”

At the end of the day, the market still acted as if the Georgia election runoff was the most important event from a market perspective. The Associated Press named Democrat Raphael Warnock the winner in his race against Republican Kelly Loeffler earlier in the day and called the race between Democrat Jon Ossoff and Republican Senator David Perdue in favor of Ossoff late in the day. midday.

Expectations that Democrats will control the Senate and the House have led the Dow to rally, just as it did after Joe Biden’s election victory, as the Nasdaq lags behind. A Democrat-controlled Congress is more likely to pass a bigger stimulus bill, giving the economy a boost.

The market could also look back at history, showing the Dow Jones gained on average nearly 18% when Democrats had control of the Presidency, Senate and House of Representatives, according to Bespoke data. Investment Group.

This would all change if the situation in Washington worsens. But for now, the market thinks it knows enough to make it clear: that too will pass.

Write to Ben Levisohn at [email protected]