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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.
A 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 2.2% and 3.2% in
early premarket trading.
Tesla Inc was the only major technology stock trading higher.
At 06:50 a.m. ET, Nasdaq 100 E-minis were down 253 points, or
1.98%, and S&P 500 E-minis were down 13.75 points, or 0.37%.
However, Dow e-minis climbed 0.2% 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 2.5% 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.
"Market is quite nervous about its position in large tech."
Shares of JPMorgan Chase & Co, Citigroup Inc and Bank of America
Corp rose between 1.3% and 2.4%, tracking a sharp rise in the
benchmark 10-year U.S. Treasury yield. [US/]
Invesco Solar ETF gained about 5% 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 8.4%.
(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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