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
06 Jan 2021 08:30PM (Updated: 06 Jan 2021 10:06PM) [h=2]Share this content[/h]
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REUTERS: Futures tied to the tech-heavy Nasdaq 100 index tumbled nearly 1.5per cent on Wednesday as the likelihood of Democrats gaining control of the Senate sparked fears of increased regulatory scrutiny of 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 final outcome is not expected until later on Wednesday at the earliest.
A "blue wave" would give more scope for President-elect Joe Biden to act on his agenda including new stimulus, but it could also mean higher corporate taxes and more regulations for technology behemoths, which led Wall Street's recovery from a coronavirus-driven crash last year.
"If the Democrats take control of the Senate, corporate taxes are going to go up and that's a negative for Corporate America and for equities," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"In the short term, it is likely to cap stocks and could be the catalyst for a pullback."
AdvertisementAdvertisementApple Inc, Microsoft Corp, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc dropped between 1.6per cent and 2.4per cent in early premarket trading.
Tesla Inc was the only major technology stock trading higher.
At 08:35 a.m. ET, Nasdaq 100 E-minis were down 177.75 points, or 1.39per cent, and S&P 500 E-minis were down 9.75 points, or 0.26per cent.
However, Dow e-minis climbed 0.14per cent as bets on another round of stimulus and infrastructure spending propped up shares of industrial bellwethers Caterpillar Inc and 3M Co. Futures tracking the small-cap Russell 2000 index jumped to a record high.
AdvertisementShares of JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp rose between 2.5per cent and 3per cent, tracking a sharp rise in the benchmark 10-year U.S. Treasury yield.
Hopes of a vaccine-powered economic recovery in 2021 pushed 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," said Sebastien Galy, macro strategist at Nordea Asset Management.
"Market is quite nervous about its position in large tech."
Invesco Solar ETF gained about 5.6per cent on expectations that clean energy companies will benefit under a Democrat-controlled Congress, while bets on decriminalizing marijuana at the federal level lifted ETFMG Alternative Harvest ETF up 8per cent.
AmerisourceBergen Corp gained 4.6per cent after the U.S. drug wholesaler said it would buy Walgreens Boots Alliance's drug distribution business for US$6.5 billion to expand in Europe. Dow component Walgreens rose 2.2per cent.
(Reporting by Medha Singh, Devik Jain and Sagarika Jaisinghani in Bengaluru; Additional reporting by Scott Murdoch in Hong Kong; Editing by Maju Samuel and Anil D'Silva)
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06 Jan 2021 08:30PM (Updated: 06 Jan 2021 10:06PM) [h=2]Share this content[/h]
[h=2]Bookmark[/h]
REUTERS: Futures tied to the tech-heavy Nasdaq 100 index tumbled nearly 1.5per cent on Wednesday as the likelihood of Democrats gaining control of the Senate sparked fears of increased regulatory scrutiny of 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 final outcome is not expected until later on Wednesday at the earliest.
A "blue wave" would give more scope for President-elect Joe Biden to act on his agenda including new stimulus, but it could also mean higher corporate taxes and more regulations for technology behemoths, which led Wall Street's recovery from a coronavirus-driven crash last year.
"If the Democrats take control of the Senate, corporate taxes are going to go up and that's a negative for Corporate America and for equities," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"In the short term, it is likely to cap stocks and could be the catalyst for a pullback."
AdvertisementAdvertisementApple Inc, Microsoft Corp, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc dropped between 1.6per cent and 2.4per cent in early premarket trading.
Tesla Inc was the only major technology stock trading higher.
At 08:35 a.m. ET, Nasdaq 100 E-minis were down 177.75 points, or 1.39per cent, and S&P 500 E-minis were down 9.75 points, or 0.26per cent.
However, Dow e-minis climbed 0.14per cent as bets on another round of stimulus and infrastructure spending propped up shares of industrial bellwethers Caterpillar Inc and 3M Co. Futures tracking the small-cap Russell 2000 index jumped to a record high.
AdvertisementShares of JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp rose between 2.5per cent and 3per cent, tracking a sharp rise in the benchmark 10-year U.S. Treasury yield.
Hopes of a vaccine-powered economic recovery in 2021 pushed 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," said Sebastien Galy, macro strategist at Nordea Asset Management.
"Market is quite nervous about its position in large tech."
Invesco Solar ETF gained about 5.6per cent on expectations that clean energy companies will benefit under a Democrat-controlled Congress, while bets on decriminalizing marijuana at the federal level lifted ETFMG Alternative Harvest ETF up 8per cent.
AmerisourceBergen Corp gained 4.6per cent after the U.S. drug wholesaler said it would buy Walgreens Boots Alliance's drug distribution business for US$6.5 billion to expand in Europe. Dow component Walgreens rose 2.2per cent.
(Reporting by Medha Singh, Devik Jain and Sagarika Jaisinghani in Bengaluru; Additional reporting by Scott Murdoch in Hong Kong; Editing by Maju Samuel and Anil D'Silva)
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