Even as chaos unfolded at the U.S. Capitol, financial markets have shrugged.
The day after supporters of President Donald Trump stormed the U.S. Capitol, causing the evacuation of both chambers of Congress and resulting in four deaths, stocks and bond yields have climbed, while the dollar has strengthened marginally. The benchmark S&P 500 index of large-cap U.S. stocks closed up 1.48% on the day, while the tech-heavy Nasdaq gained 2.56%, the Dow Jones Industrial Average settled 0.69% higher and the small-cap Russell 2000 closed up 1.89%. All were all-time highs.
The 10-year Treasury yield closed up 4 basis points at 1.08%, while the Dollar Index was up 0.3%.
Technology stocks led all sectors, gaining 2.65% on the day, with all but two of the S&P 500's 11 sector gaining on Jan. 7. Utilities fell by 1.33% and consumer staples drop by 0.32%.
Investors appear to see the storming of the Capitol building by supporters of President Donald Trump as a one-off event, rather than a sign of troubling cracks in the foundations of American democracy. Congress formally certified President-elect Joe Biden's victory in the early hours of Jan. 7, after which Trump, through a spokesman on Twitter, assured an "orderly transition" of power to Biden.
"It was a dark day in American history, but no one doubted that the chaos was going to be short-lived," said Edward Moya, a senior market analyst with OANDA. "Today is business as usual now that President Trump has agreed to an orderly transfer of power."
The day of the riot, the S&P 500 gained 0.6%, only slightly off its intraday high, while the Dow Jones Industrial Average and Russell 2000 settled at new highs. The 10-year Treasury yield rose above 1% for the first time since March as investors digested news of Democratic victories in Georgia's Senate runoff races, while the dollar, another haven asset, declined. The Cboe Volatility Index, a gauge of predicted volatility on the S&P 500, briefly spiked on Jan. 6, from 22.5 to 26.0, before ending the day lower than where it started.
The S&P 500 has increased 12.9% since the U.S. presidential election took place Nov. 3.
While markets tend to have a short-term view, analysts with a longer horizon also dismissed the events of Jan. 6.
"While the events on Capitol Hill underline, once again, the extreme political polarization of the country, ultimately, U.S. institutions have persevered, and preserved US democracy, its transparent and accountable governance framework and processes," Alvise Lennkh, deputy head of sovereign and public sector ratings at Scope Ratings, wrote in an emailed statement. "Contrary to our expectations, President Biden will now enjoy a majority in the House of Representatives as well as the Senate following democratic victories in the two run-off Senate seats in the state of Georgia. This should provide him with greater political capacity to appoint his nominees and implement his domestic agenda priorities over the coming two years."
Markets instead appear focused on the prospects for new stimulus and potentially higher taxes and tighter regulation under a Biden administration that also has control of Congress.
"Developments at the Capitol change nothing from a fundamental standpoint," said Win Thin, global head of currency strategy at Brown Brothers Harriman. "Simply put, Joe Biden will be inaugurated President on January 20 and it looks likely that the Democrats will hold both houses of Congress."