Tech-Stock Futures Fall as Democrats Lead in Georgia Elections

Dow Jones Industrial Average futures rose 0.3%, while those tied to the Russell 2000, which tracks smaller stocks, jumped 2.7%. Both indexes are filled with companies beaten down by the coronavirus pandemic that stand to benefit from higher fiscal spending.

A change of control in the Senate is seen by some as a catalyst that could shift the types of stocks favored by investors away from names that dominated last year’s pandemic market rally. Big tech names were getting hit hardest in premarket trading.

Amazon,

Alphabet,

Netflix

and

Facebook

were all off more than 2% ahead of the opening bell. “The negativity today is concentrated in these large cap, growth stocks, where, frankly, valuations are already quite high,” said Mike Bell, a global market strategist at J.P. Morgan Asset Management.

Meanwhile, stocks hit hard by the pandemic such as banks, industrials and small companies were poised to rise.

Bank of America

and

Wells Fargo

shares rose 2% premarket. “You are going to see the market viewing this as positive for the value stocks because of fiscal stimulus,” Mr. Bell said.

The yield on the benchmark 10-year U.S. Treasury rose above 1% for the first time since March. The yield, which rises as the price falls, was up at 1.031% from 0.955% on Tuesday.

In the elections in Georgia, two races that will determine which party has control of the Senate, the Democrats flipped one Republican seat and maintained a narrow lead in the second race, which was too close to call.

Investors are closely following the results, betting that a “blue sweep,” Democratic control of both the Senate and the House of Representatives, would make it easier for President-elect Joe Biden’s administration to pass new legislation.

Such an outcome could scramble investors’ expectations for government policy. It would increase Mr. Biden’s chances of pushing through higher corporate and capital-gains taxes. He has promised greater scrutiny of tech giants that have powered the stock-market rally in recent years and an expansion of health-care benefits.

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