Maine investors have been watching the machinations in Washington closely, but have been focused on long-term financial goals rather than reacting to the daily news cycle, financial planners said on Wednesday.
Wall Street surged to a near-record high after Senate leaders said they reached an agreement to raise the government debt ceiling — just a day before the country would default on its debt and two days after credit rating agency Fitch Ratings put U.S. Treasury bonds at “negative” watch, a possible first step toward a downgrade.
The Dow Jones industrials average rose at the open and jumped 205.82 points, or 1.36 percent, to close at 15,373.83. The Standard & Poor’s 500 index rose 1.38 percent to 1,721.54, nearing the record high of 1,729.86 set on Sept. 19.
In the days and hours leading up to the deal, local financial planners said few clients were making investment decisions based on the Washington negotiations.
“In general, no one is panicking,” said Chris Dougherty, a certified financial planner and principal with 44 North Financial Partners in Portland. “Markets are responding on a daily basis to the news cycle. My job is to give long-term advice. By and large, our clients are used to this volatility and are not worrying about day-to-day gyrations.”
Luke Reinhard, a certified financial planner with Reinhard & Associates in Portland, said he got surprisingly few calls from clients this week.
“People aren’t acting on their worries. Washington is just one of many things to be worried about,” Reinhard said.
Reinhard said he was surprised that Wall Street responded so favorably to the news of a deal since the deal only pushed deadlines along a few months — the Treasury would be able to continue borrowing through Feb. 7, and the government would reopen through Jan. 15.
“It’s really a short-term Band-Aid,” Reinhard said.
Dougherty said clients are frustrated by Washington politics, but have not been panicked by the daily news headlines.
“Clients are frustrated by the political nature of what has happened and how it’s affected different parts of the economy,” Dougherty said. “Clients are concerned in general about the underlying economy but there’s been no more phone traffic this week than last week.”
Michael Donahoe, a certified financial planner and principal at Harvest Asset Group in Portland, said he’s gotten only one call from a client this week because of the negotiations in Washington.
“The events in Washington don’t warrant doing anything rash,” Donahoe said.
If Washington had failed to reach a deal and the country defaulted on its debt, the ramifications would have be staggering and put the U.S. economy back into a recession, financial advisers said.
“We’re already in a fragile recovery from the very significant recession. It would be very concerning to be thrown back into a recession,” Donahoe said.
Jessica Hall may be reached at 791-6316 or at: [email protected]