The Dow’s surge is a calculated response to political turmoil

Financial markets have a way of responding to chaos that often feels icky.

Financial markets have a way of responding to chaos that often feels icky. Tragedy strikes and traders (or trading algorithms) sniff out a way to make money off of it. On Jan. 6, 2021, with the Capitol in chaos, the Dow closed at a record high. Stocks also went on a tear as Covid-19 killed millions and gutted economies across the globe. This isn’t because Wall Street is full of psychopaths who want to watch the world burn. (Or at least, it’s not only because of that.) Investors make cold calculations moment to moment with a single focus: How will this affect the bottom line of the companies in my portfolio? So what should we make of the stock market rally on the first trading day after a US presidential contender was shot at? Don’t overthink it. “The market’s up today, but the market’s up every day,” Steve Sosnick, chief strategist at Interactive Brokers, tells me. While there were some pockets of the investing world betting on the likelihood of a Trump 2.0 White House, Sosnick notes that equity traders are actually pretty bad at political probabilities. One thing they’re great at is figuring out how geopolitical events effect revenues, earnings and cash flow. “In this case, it’s not really clear how this would impact the bottom lines of many companies,” he said. “Think of the other stocks that are leading the market higher. You have Apple up 2% — does that have anything to do with what happened to Trump? I don’t think so.”