Stocks surged on Wednesday as investors eyed what will likely be two Democratic victories in Georgia’s Senate runoff elections, with the Dow Jones Industrial Average hitting record-breaking intraday highs.
The Dow jumped nearly 500 points at opening, roughly 1.6%, according to CNBC, edging past its Dec. 31 closing record of 30,606.
The S&P 500 and the Nasdaq composite opened strong as well, with the S&P 500 breaking an intraday high and the Nasdaq jumping as much as 200 points heading into the afternoon.
Democratic Sen.-elect Raphael Warnock was projected to win his race against Sen. Kelly Loeffler early Wednesday morning. The race between Democrat John Ossoff and incumbent Sen. David Perdue has yet to be called, but Perdue trails Ossoff by roughly 17,000 votes, according to the Associated Press — still within Georgia’s 0.5% margin for candidates to request a recount but likely a safe-enough margin to discount a surprise upset.
Should both Warnock and Ossoff win their races, the Senate would be brought to an even 50-50 split, with Vice President-elect Kamala Harris giving the Democrats the needed tiebreaking vote.
Wednesday also saw the 10-year Treasury note break above 1% for the first time since the coronavirus pandemic caused one of the steepest market slides in modern history.
Despite the market highs, technology stocks dipped slightly on the news. All of the stocks for Facebook, Apple, Amazon, Netflix, and Google opened lower and have yet to break above Tuesday’s closing prices. Investors speculate a unified government on Capitol Hill could lead to increased regulations and higher taxes for large corporations. But right now, broader markets are counting on a Democratic government passing more stimulus for businesses hit hard by the pandemic — and more checks to people.
“In the immediate term, markets are pricing in more stimulus. From an equity standpoint, that means tech underperformance and cyclical/value outperformance,” Sevens Report Research founder Tom Essaye said. “The biggest takeaway from the Democrats win is more power behind the cyclical/value/higher rates trade.”
