(Reuters) – Futures tracking the Nasdaq 100 index fell more than 1% on Wednesday as investors see the chance that Democrats will win both races in a Georgia Senate election that will determine the balance of power in Washington.
Edison Research named one of the races for Democrat Raphael Warnock, and incumbent Kelly Loeffler, while Democratic challenger Jon Ossoff had a slim lead over Republican David Perdue with 98% of the vote.
A Democrat-controlled Senate will run for president. Joe Biden offers more room to act on his reform plans, including the new COVID-19 stimulus, but it could also mean higher corporate taxes and stricter regulations for the tech megapets – policies that are not usually favored by Wall Street.
“A ‘blue wave’ may not be a bad outcome for markets, as decisive fiscal action will help accelerate economic recovery,” said Vasu Menon, executive director of investment strategy, OCBC Bank, Singapore.
“It will generally be positive for risk assets, especially equities, credit, commodities and bonds in emerging markets.”
At 02:06 ET, Dow e-minis rose 89 points, or 0.29%. Ingredients of the Blue-chip Dow are generally expected to benefit from an increase in economic activity.
S&P 500 e-minis fell by 5.25 points, or 0.14%, and Nasdaq 100 e-minis by 147 points, or 1.15%.
The hope of a vaccine-driven 2021 vaccine boosted Wall Street’s key indices at the end of December, but sentiment was recently suppressed by the discovery of a more contagious variant of the coronavirus and the latest restrictions.
Analysts also expect the market to consolidate December-January gains as asset managers seek to balance their heavily tilted equities portfolios.
Reporting by Sagarika Jaisinghani in Bengaluru; Additional reporting by Scott Murdoch in Hong Kong; Edited by Sriraj Kalluvila