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Wall Street Opens Lower as Dems Edge Toward Clinching Senate; NASDAQ Down 0.9%

Stock MarketsJan 06, 2021 09:39AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- U.S. stock markets opened mostly lower on Wednesday amid signs that the Democratic Party is set to break the Republicans' six-year control of the Senate, finally completing the sweep of administration and Congress that they had appeared to fall short of in November.

Preliminary projections put Democratic candidates ahead in the runoff elections for both of Georgia's Senate seats, results that - if confirmed - would create a 50-50 split in the upper chamber and leave overall control in the power of vice president Kamala Harris' casting vote. 

Global stocks had received the news positively overnight, pricing in greater expectations of higher fiscal stimulus and a more collegial foreign policy than that pursued by outgoing President Donald Trump. Such hopes were reinforced by the announcement by payrolls processor ADP that private-sector employment fell by 123,000 in the month through mid-December, paving the way for a big negative surprise when the official nonfarm payrolls numbers are announced on Friday.

However, the news revived fears among U.S. investors of higher taxes and tighter regulation. 

By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was up 57 points, or 0.2%, at 30,449 points, but that was overshadowed by a 0.9% drop in the Nasdaq Composite. The S&P 500 was down 0.1%.  All three indices were rebounding, after their futures contracts had initially posted bigger losses overnight.

The stocks that fared best were those likely to be most affected by the loss of Republican restraint on new legislation. That went particularly for pot stocks - Canopy Growth Corp (NASDAQ:CGC) (TSX:WEED) stock rose 16% and Aurora Cannabis (NYSE:ACB) stock rose 14% - and banking stocks, which rose broadly as the market anticipated more federal government borrowing, driving the 10-year Treasury yield above 1% for the first time since last February. Higher bond yields help bank profitability by widening the margin short and long-term lending rates. Shares in Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and Bank of America (NYSE:BAC) all rose by more than 5%.

By contrast, shares in Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) all fell by more than 2%, amid fears that a unified Democrat Congress and administration could regulate them more tightly, particularly with regard to antitrust issues. 

Tech stocks are also in general highly exposed to profit-taking driven by fears that a Democratic Congress will raise taxes on capital gains, most of which have accrued in a relatively small number of megacap tech companies over the last few years. Netflix (NASDAQ:NFLX) stock fell 2.9%, while Zoom Video (NASDAQ:ZM) stock fell 4.6% and Pinterest (NYSE:PINS) stock fell 4.0%.

 

Wall Street Opens Lower as Dems Edge Toward Clinching Senate; NASDAQ Down 0.9%
 

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Comments (13)
Mister Burns
Mister Burns Jan 06, 2021 11:27AM ET
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Someone is mad the dems won. They still pumping this as the main headline
Ben Ramirez
Ben Ramirez Jan 06, 2021 11:13AM ET
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Not sure about this mysterious bull ride. seems fishy
Haz Matt
Haz Matt Jan 06, 2021 11:13AM ET
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fake news!
Raksaksa Tonne
Raksaksa Tonne Jan 06, 2021 11:05AM ET
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isn't it about time you updated this story given that the Dow is up 1.7% now?
Hunt Richardson
Hunt Richardson Jan 06, 2021 10:53AM ET
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LOL. Dems got the bucks
Lex Wild
Lex Wild Jan 06, 2021 10:43AM ET
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Sure we see very low haha
Casey Christianson
Casey Christianson Jan 06, 2021 10:40AM ET
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it looks like it is up and enjoying some socialism being pumped into the economy
YUNUS EMRE ALTUN
YUNUS EMRE ALTUN Jan 06, 2021 10:33AM ET
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Unh recovered daily lose , but cant say same for msft and apple :/ . Thx to georgia
Kaveh Sun
Kaveh Sun Jan 06, 2021 10:32AM ET
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Look like there is a record high either at the end of the day or tomorrow
Ben Dover
Ben Dover Jan 06, 2021 10:24AM ET
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I must be color blind, where is all the market crash i’ve been hearing so much about.
Kaveh Sun
Kaveh Sun Jan 06, 2021 10:24AM ET
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Wont b any crash Until the Fed pull the rug.
Kaveh Sun
Kaveh Sun Jan 06, 2021 10:21AM ET
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Socialist,communist people sound good but in reality whatever they try to do, at best the outcome is average. Dems r a bunch of socialists.
Mister Burns
Mister Burns Jan 06, 2021 10:20AM ET
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Must have repubs writing these articles. Where's the news on new record high on projected dem win in GA 🧐
Kaveh Sun
Kaveh Sun Jan 06, 2021 10:20AM ET
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Can u read?
Kaveh Sun
Kaveh Sun Jan 06, 2021 10:20AM ET
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The spx record was 3770. Now is at 3746. If u call that a record, it speaks for u n ur party.
Mister Burns
Mister Burns Jan 06, 2021 10:20AM ET
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What were you saying about numbers? Is 31,000 not higher than 30,000
Irvin Mermelstein
Irvin Mermelstein Jan 06, 2021 9:55AM ET
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Dem victories are great news for the markets.
Matt Kay
Matt Kay Jan 06, 2021 9:55AM ET
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For everyone, not just the markets.
NENEV ESSA
NENEV ESSA Jan 06, 2021 9:55AM ET
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Matt Kay I guess you like communism
NENEV ESSA
NENEV ESSA Jan 06, 2021 9:55AM ET
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Matt Kay I guess you like communism
Matt Kay
Matt Kay Jan 06, 2021 9:53AM ET
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/M2K up 2% and /NQ will be green in 15 minutes. Stonks only go up. Free markets are De@d
 
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