Why Wall Street can disregard protests, assassinations and riots

New York(CNN Business) It's not a surprise that stocks mostly rallied Wednesday and were up again Thursday morning, despite the ugly and tragic events during a riot at the nation's Capitol. It's simply a case of history repeating itself.

Wall Street has often been unfazed by civil unrest in America. As long as the turmoil didn't have a tangible impact on earnings or economic growth, investors just kept buying stocks.

That was the case in after the assassination of President Kennedy in 1963, during civil rights marches in the South in 1965, following Vietnam War protests in 1967 and outrage after Martin Luther King Jr. was killed in 1968.

Stocks were volatile during that tumultuous decade, and they often slipped in the wake of specific news events. But in each of those four years the S&P 500 wound up with a gain, with stocks up 14% annually on average.

The market also rallied in 1992, hitting what were then all-time highs, despite riots that took place after the acquittal of Los Angeles police officers for the beating of Rodney King.

Stocks also continued to climb in 2014 following protests that began in Ferguson, Missouri, in response to the fatal police shooting of unarmed Black teenager Michael Brown — a death that inspired the Black Lives Matter movement.

Of course, this is not to suggest that any of the aforementioned events in America's history are insignificant. Far from it. They each had a monumental impact on the political landscape, which indirectly affects the economy and stock market.

But it's clear that even bigger shocks are required to have an impact on consumer and corporate behavior, which is what ultimately matters most to investors — and the policy makers who control interest rates and government spending.

That's arguably the main reason why events such as the 9/11 terrorist attacks, the 2008 Great Financial Crisis and the beginning of the Covid-19 shutdowns last March had much greater impacts on consumer and investor behavior. They were all true exogenous shocks to the economy.