Nasdaq futures are down 2% as investors prepare for the possibility of a blue wave

(Reuters) – Futures that track the tech-heavy Nasdaq 100 index fell 2% on Wednesday as investors priced in the possibility of a Democratic-controlled Senate formation that could tighten regulations on tech mega firms.

File photo: The American flag covers the front end of the New York Stock Exchange (NYSE) in New York City, New York, USA, November 9, 2020. Reuters / Brendan McDermid

Democratic challenger Raphael Warnock has won the heavily contested Senate race in Georgia over incumbent President Kelly Loeffler, television networks and Edison Research predicted. The race between Democrat John Usoff and Republican David Purdue was still very close to the competition.

The so-called “blue wave” would give President-elect Joe Biden more leeway to work on his reform plans including stimulating the new COVID-19, but it could also mean higher corporate taxes and more regulations on the tech giants that led Wall Street to recover from a crash. Because of the Corona virus last year.

“We’re seeing some sell-offs on the Nasdaq (futures) market because that’s where the direct war will come in regarding what the Democrats have said about breaking the big tech,” said Keith Timberton, a stock sales trader. In Forte Securities.

Shares of Apple Inc, Microsoft Corp, Inc and Alphabet Inc, Google’s parent company, fell between 1.9% and 2.4% in early trade. Tesla Inc was the only major technology stock that rose.

By 4:26 AM ET, the S&P 500 e-minis was down 18 points, or 0.48%, and the Nasdaq 100 e-minis was down 242.25, or 1.89%.

The Dow e-minis was nearly flat, with stimulus bets supporting industrial stocks Caterpillar Inc and 3M Co Futures tracking the small Russell 2000 index jumping 1.3%.

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“The blue wave” may not be a bad outcome for the markets, as critical fiscal measures will help accelerate the economic recovery, said Vasu Menon, Executive Director of Investment Strategy at OCBC Bank, Singapore.

Shares of major bank JPMorgan Chase & Co., Citigroup and Bank of America Corp. rose between 1.3% and 2.4%, tracking Treasury yields. [US/]

Hopes for a vaccine-backed economic recovery in 2021 pushed major Wall Street indices to record highs in late December, but sentiment has been dampened recently due to the discovery of a more contagious variant of the coronavirus and recent restrictions.

Analysts are also expecting the market to consolidate December’s gains in January as asset managers look to rebalance their portfolios, which were heavily skewed towards equities.

Covering by Sagarika Jaisingani in Bengaluru; Co-coverage by Scott Murdoch in Hong Kong. Edited by Siraj Kalofela and Magu Samuel

Angelica Johnson

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