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

Investors tend to be optimists. After all, the stock market has been one of the most amazing elements of financial success for generations, with top companies finding fresh ways to overcome new obstacles in their pathways to growth.

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

Image source: Getty Images.

How the market fared on Monday

A somewhat turbulent session on Monday ended in substantial gains. Market participants were able to shrug off COVID-19 controversy and ongoing election-results reviews to keep their eyes on the long run. The Dow Jones Industrial Average (^DJI 0.69%) climbed to within a short distance from the 30,000 mark, while the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) enjoyed more modest gains of their own.

Today's stock market

Data source: Yahoo! Finance.

Yellen gets Biden's nod

President-elect Joe Biden will nominate former Fed chair Janet Yellen as his pick to lead the Treasury Department. Yellen would become the first woman to hold the post if the Senate confirms her nomination early next year.

Yellen has already made her views clear in her former role at the Federal Reserve. While leading the Fed, Yellen took a more gradual approach toward monetary policy than most of her predecessors, choosing not to be in a hurry to tighten rates even as the U.S. economy accelerated in the mid-2010s. Fed policy supported efforts to boost employment instead, a sentiment that very much resonates both with progressive Democrats and with Republicans in industrial states hit hard by global competition. At her confirmation hearings to become Fed chair, Yellen received bipartisan support.

Some progressives will be disappointed that Biden didn't choose Sen. Elizabeth Warren (D-Mass.), who has been far more outspoken in her criticisms of Wall Street and the broader business community. For investors, though, the news suggests a less confrontational approach to economic policy -- something that many had hoped for from a Biden administration.

Is Dow 30,000 coming?

With today's gains, the Dow came within 410 points of reaching the 30,000 mark for the first time ever. The Dow's record close on Nov. 12 was less than 50 points away from the milestone, but excitement over the initial coronavirus vaccine success wasn't quite enough to push it over the edge.

Less than two weeks later, the Dow has worked its way back higher again. Several factors are feeding the move:

1. Hard-hit aerospace giant Boeing (BA -0.76%) has finally gotten permission to get its 737 MAX aircraft back in the air, and an end to the coronavirus crisis could get travelers aboard those airplanes.
2. Consumer stocks continue to do well even as new lockdown provisions take effect in the U.S. and around the world. Nike (NKE -0.18%) recently boosted its dividend, noting that it's been able to drive business through its direct channel.
3. Even in the still-struggling energy industry, Chevron (CVX 0.57%) has bounced dramatically from its October lows, soaring more than 35% in less than a month. The same has been true for big banks, with Goldman Sachs (GS 1.59%) and JPMorgan Chase (NYSE: JPM) rebounding nicely.

A holiday rally is certainly possible, especially when all the Dow needs is about a 1.5% move higher. If market participants keep getting favorable news on the economic and political fronts, then it could be the catalyst that the Dow needs to get over 30,000 -- and the latest sign of strength from a stock market that has defied all odds in 2020.