Yellen Treasury Pick Raises Stock Markets; Dow Eyes 30,000

Investors tend to be optimistic. After all, the stock market has been one of the most amazing parts of financial success for generations, as great companies find new ways to overcome new obstacles on their path to growth.

Still, that doesn’t make it any less frightening to face the unknown. When the future is uncertain, it can be heartwarming to see a familiar face emerge in a new role. That’s what’s going to happen at the Treasury Department in 2021, according to reports, and the decision eliminates a major source of concern about which direction the Biden administration would choose for its economic policy.

How the market behaved on Monday

A somewhat eventful session on Monday resulted in substantial gains. Market participants were able to ignore the controversy over COVID-19 and ongoing election results reviews to keep their eyes on the long term. the Dow Jones Industrial Average (DJ INDICES: ^ DJI) climbed a short distance from the 30,000 mark, while the S&P 500 (SNPINDEX: ^ GSPC) and Nasdaq composite (NASDAQINDEX: ^ IXIC) benefited from more modest gains.

Today’s stock exchange

Data Source: Yahoo! Finance.

Yellen gets Biden’s nod

President-elect Joe Biden will appoint former Fed President Janet Yellen as his choice to head the Treasury Department. Yellen would become the first woman to hold the post if the Senate confirms her appointment early next year.

Yellen has already made his point clear in his former role at the Federal Reserve. While leading the Fed, Yellen took a more gradual approach to monetary policy than most of his predecessors, choosing not to be in a rush to tighten rates even as the US economy accelerated in the mid-2010s. Instead, the Fed has supported efforts to boost jobs, a sentiment that resonates strongly with both progressive Democrats and Republicans in industrialized states hard hit by global competition. During her confirmation hearings to become Fed chairman, Yellen received bipartisan support.

Some progressives will be disappointed that Biden did not choose Senator Elizabeth Warren (D-Mass.), Who has been much more outspoken in her criticisms of Wall Street and the business community in general. For investors, however, the news suggests a less confrontational approach to economic policy – something many had hoped for from a Biden administration.

Is Dow 30,000 coming?

With today’s gains, the Dow Jones has come within 410 points to hit the 30,000 mark for the first time. The Dow’s record close on November 12 was within 50 points of the milestone, but the excitement over the coronavirus vaccine’s initial success was not quite enough to push it to its limits.

Less than two weeks later, the Dow Jones rallied again. Several factors are fueling the movement:

1. Hard-hit aerospace giant Boeing (NYSE: BA) finally got permission to put its 737 MAX planes back in the air, and the end of the coronavirus crisis could get travelers on those planes.
2. Consumer stocks continue to do well even as new lockdown provisions take effect in the United States and around the world. Nike (NYSE: DE) recently increased its dividend, noting that it has been able to drive business through its direct channel.
3. Even in the still struggling energy industry, Chevron (NYSE: CVX) rebounded dramatically from its October lows, climbing more than 35% in less than a month. It was the same for the big banks, with Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) bounces well.

A holiday rally is certainly possible, especially when all the Dow needs is around 1.5% higher. If market participants continue to receive favorable news on the economic and political fronts, then this could be the catalyst the Dow needs to break through 30,000 – and the latest sign of strength from a stock market that has defied all expectations in 2020.