The mystery over which candidates prevailed in the Democratic Iowa caucuses may seem like a debacle to the political class but on Wall Street Tuesday it seemed largely irrelevant, at worst.
There were echoes of election night 2016, with stocks soaring as Washington appeared stunned by an unpredictable result that at least one of the corporate new outfits warned would “erode trust” in our institutions. More than one investor stayed up late last night enjoying the familiar look of anguish on the faces of people whose jobs are named for the part of a ship that keeps it from moving.
The Dow Jones Industrial Average jumped 407 points, or 1.44 percent. The S&P 500 climbed 1.5 percent. The Nasdaq Composite hit a new all-time high by rising 2.1 percent.
Stocks hit hard by coronavirus fears performed well. American Airlines shares were up by 5 percent and United shares were up by 5.3 percent. Wynn shares rose 3.2 percent even though Chinese officials have shut down gambling-haven Macau.
Tesla has not yet introduced a flying car but its stock appears to have discovered anti-gravity. Shares were up by as much as 24 percent on Tuesday before retreating to a cruising altitude of merely a 13 percent gain. The share price, which was all the way down to $179 last summer, is now closing in on $1000. Funding confirmed, indeed.
Microsoft, Apple, and Caterpillar–which you can think of as bellwethers for global growth–rose by 3 percent or more.
Even the bond market joined the post-Iowa party on Tuesday, with the yield on 10-year Treasurys rising above the 3-month and thus un-inverting the curve.
Leaders of the Democratic party in Iowa have threatened to release at least some of the results of the caucuses on Tuesday afternoon. So the caucus chaos rally may be short-lived.