Here in Washington, making ‘Blue Wave’ means for the markets

“Blue Wave” is back on Wall Street. Or maybe call it a mini wave, but either way, Democrats see likely to be in pole position after major runoff The US Senate race in Georgia is tilted away from Republicans, with results already through financial markets Are blowing

The Associated Press declared Democrat Rafael Warnock the winner over Republican Sen. Kelly Loeffler in a contest, while Democrat John Ossoff was leading Republican Sen. David Perdue in a second Senate runoff.

Democratic victories in both races would create a 50–50 Senate, giving Democrats control, as Vice-President-Elect Kamala Harris would break the tied votes, and present the President-elect with a clear, but not unaffected, legislative including running tax. Runway to implement changes. Rolling out excess fiscal stimulus in the face of individuals and corporations and the COVID-19 epidemic.

Here’s how markets are reacting to the prospects of a slim Democratic majority, with some calling it the Blue Wave or the Mini Wave.

bond yields

US bond yields have been rising, with the 10% Treasury breaking a barrier at 1% for the first time since March, with fixed-income investors betting that the Democratic-led initiative would lead to more debt and result in higher yields , In less time.

Rising bond yields also have an impact in broader markets, leading to higher borrowing costs and the discount rate used to measure the value of bonds versus equity.

Broad market

The team at Wolff Research, including Chris Senk, chief investment strategist, is making the case that value shares will rise in the name of growth as the economy improves.

Wolf research

However, they are expecting a rotation, unlike back in November, much faster, perhaps, as stocks have already moved significantly in this direction in the last few weeks of 2020.

Bank shares

The surge in key bank shares was seen amid rising bond yields and rising yields, which augurs well for financial institutions’ business models.

JPMorgan Chase & Co., shares of JPM
+ 5.22%,
Wells Fargo & Company WFC,
+ 8.02%,
Citigroup C,
+ 7.16%,
Morgan Stanley MS,
+ 7.64%
And Goldman Sachs GS,
+ 5.69%
All were increasing according to FactSet data.

Large-cap technology

Shares of American technology giants, along with Netflix NFLX shares, declined in early trade on Wednesday.
Facebook fb,
, Microsoft MSFT,
, Google Parent Alphabet Inc. GOOG,

And Apple AAPL,
Fast reducing charge. Select technology sector SPDR XLK,
Which reflects the technical sector of the S&P 500, was over 1% before the bell.

The tech sector suffers at least partly because bond yields are rising, providing a hit to the comparative value of those investments, but higher yields can also place a disadvantage on corporate investment for capital-intensive technology firms.

Solar shares shine

Solar-related investments appeared to jump on Wednesday as President-Elect Biden ran on a stage for a clean energy revolution, which is likely to be easy to implement if Democrats win both seats in the Georgia Senate.

One presidential-election plan over the next 10 years is to invest more than $ 400 billion in the clean energy industry.

On Wednesday, shares of Invesco Solar ETF Tan, a popular exchange-traded fund,
+ 11.76%,
Or Tan, mentioning its ticker symbol, was over 6%.

Shares of companies such as solar-panel installer Sunrun RUN,
+ 14.16%
Over 6% were and competitor SunPower Corp. For SPWR,
+ 25.87%
First Solar Inc. FSLR, while were over 12%
+ 10.61%
Its share was seeing gains in the premarket around 8%.

Electric vehicles get a shock

Biden’s green initiative also favored companies such as electric-vehicle manufacturer Tesla Inc. The Palo Alto-based company shares were up nearly 4%, while China’s competitors Nio Inc. For the NIO.
+ 1.24%
And li auto light,
+ 6.13%
Wednesday also set to trade higher.

Hemp stock

Democrats are expected to pursue a more hemp-friendly reform agenda under President-Elect Joe Biden and Vice-President Elect Kamala Harris, who have been more supportive of opening up the banking sector and other essential services to the industry. , A difficultly disrupted regulatory backdrop that has allowed the black market to flourish.

ETFMG Alternative Harvest ETF MJ,
+ 10.20%
About 7% of the cannabis ETF THX was in the premarket,
+ 10.79%
Was up 1.1%. Among individual shares, US-listed shares of Aurora Cannabis Inc. ACB,
+ 12.34%

+ 13.40%
The most widely held stocks on the Robinhood Trading App, were 15%. Tilre inc. TLY
+ 19.51%
Canopy Development Corp CGC, up 15.4%
+ 13.46%
Was up 8% and Chronos Group Inc. CRON,
+ 14.51%
Was up 10%.

Small-cap stock

Small-capitalization Russell 2000 Index RUT,
+ 4.35%
Wednesday was trading in record-high territory, as investors bet that Biden’s plan for infrastructure spending legislation could help boost the financially sensitive components that Russell 2000s to build.

Investors are also likely to support value-oriented investments that lag behind in performance compared to tech-focused, growth stocks that populate the Nasdaq Composite.


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