Business Futures tracking the Nasdaq 100 index fell more than 1per cent on Wednesday as investors priced in the prospect of Democrats winning both races in a Senate run-off election in Georgia that will determine the balance of power in Washington.
FILE PHOTO: The U.S. flag covers the front facade of the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 9, 2020. REUTERS/Brendan McDermid
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REUTERS -Futures tied to the tech-heavy Nasdaq 100 index sank 2per cent on Wednesday as the possibility of Democrats gaining control of the Senate sparked fears of tighter regulations on technology mega-caps.
Democratic challenger Raphael Warnock won a hotly contested Senate race in Georgia over Republican incumbent Kelly Loeffler, while Democrat Jon Ossoff held a narrow lead over incumbent Republican David Perdue in the other race.
AdvertisementAdvertisementA so-called "blue wave" would give more scope for President-elect Joe Biden to act on his reform plans including new COVID-19 stimulus, but it could also mean higher corporate taxes and more regulations for technology behemoths, which had led Wall Street's recovery from a coronavirus-driven crash last year.
"If Democrats hold both Houses then there will be more pressure to regulate some of the bigger play within growth and most of the (market) gains are concentrated in them," said Sebastien Galy, macro strategist at Nordea Asset Management.
Apple Inc, Microsoft Corp, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc dropped between 2.2per cent and 3.2per cent in early premarket trading.
Tesla Inc was the only major technology stock trading higher.
AdvertisementAdvertisementAt 06:50 a.m. ET, Nasdaq 100 E-minis were down 253 points, or 1.98per cent, and S&P 500 E-minis were down 13.75 points, or 0.37per cent.
However, Dow e-minis climbed 0.2per cent as bets on a larger fiscal stimulus and infrastructure spending propped up shares of industrial bellwethers Caterpillar Inc and 3M Co. Futures tracking the small-cap Russell 2000 index jumped 2.5per cent to a record high.
Hopes of a vaccine-powered economic recovery in 2021 had sent Wall Street's main indexes to record highs in late-December, with sectors that had previously lagged, including banks, industrials and energy, fuelling the rally.
"You are seeing more evidence of a rebound in value over growth, and it feeds into the debate as to whether investors should pile into more cyclicals which are co-related with value or stick to bigger players within the growth space given that valuations in some cases are quite extreme," Galy added.
Advertisement"Market is quite nervous about its position in large tech."
Shares of JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp rose between 1.3per cent and 2.4per cent, tracking a sharp rise in the benchmark 10-year U.S. Treasury yield.
Invesco Solar ETF gained about 5per cent on expectations that clean energy companies will benefit under a Democrat-control Congress, while bets on the decriminalization of marijuana at the federal level lifted ETFMG Alternative Harvest ETF up 8.4per cent.
(Reporting by Sagarika Jaisinghani and Medha Singh in Bengaluru; Additional reporting by Scott Murdoch in Hong Kong; Editing by Sriraj Kalluvila and Maju Samuel)
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06 Jan 2021 08:30PM [h=2]Share this content[/h]
[h=2]Bookmark[/h]
REUTERS -Futures tied to the tech-heavy Nasdaq 100 index sank 2per cent on Wednesday as the possibility of Democrats gaining control of the Senate sparked fears of tighter regulations on technology mega-caps.
Democratic challenger Raphael Warnock won a hotly contested Senate race in Georgia over Republican incumbent Kelly Loeffler, while Democrat Jon Ossoff held a narrow lead over incumbent Republican David Perdue in the other race.
AdvertisementAdvertisementA so-called "blue wave" would give more scope for President-elect Joe Biden to act on his reform plans including new COVID-19 stimulus, but it could also mean higher corporate taxes and more regulations for technology behemoths, which had led Wall Street's recovery from a coronavirus-driven crash last year.
"If Democrats hold both Houses then there will be more pressure to regulate some of the bigger play within growth and most of the (market) gains are concentrated in them," said Sebastien Galy, macro strategist at Nordea Asset Management.
Apple Inc, Microsoft Corp, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc dropped between 2.2per cent and 3.2per cent in early premarket trading.
Tesla Inc was the only major technology stock trading higher.
AdvertisementAdvertisementAt 06:50 a.m. ET, Nasdaq 100 E-minis were down 253 points, or 1.98per cent, and S&P 500 E-minis were down 13.75 points, or 0.37per cent.
However, Dow e-minis climbed 0.2per cent as bets on a larger fiscal stimulus and infrastructure spending propped up shares of industrial bellwethers Caterpillar Inc and 3M Co. Futures tracking the small-cap Russell 2000 index jumped 2.5per cent to a record high.
Hopes of a vaccine-powered economic recovery in 2021 had sent Wall Street's main indexes to record highs in late-December, with sectors that had previously lagged, including banks, industrials and energy, fuelling the rally.
"You are seeing more evidence of a rebound in value over growth, and it feeds into the debate as to whether investors should pile into more cyclicals which are co-related with value or stick to bigger players within the growth space given that valuations in some cases are quite extreme," Galy added.
Advertisement"Market is quite nervous about its position in large tech."
Shares of JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp rose between 1.3per cent and 2.4per cent, tracking a sharp rise in the benchmark 10-year U.S. Treasury yield.
Invesco Solar ETF gained about 5per cent on expectations that clean energy companies will benefit under a Democrat-control Congress, while bets on the decriminalization of marijuana at the federal level lifted ETFMG Alternative Harvest ETF up 8.4per cent.
(Reporting by Sagarika Jaisinghani and Medha Singh in Bengaluru; Additional reporting by Scott Murdoch in Hong Kong; Editing by Sriraj Kalluvila and Maju Samuel)
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