US stocks open lower as investors mull Georgia runoff nail-biter

With the Democrats closing in on winning control of the Senate, US stock markets opened lower as investors weigh the pros and cons of Biden’s economic agenda.

With the Democrats closing in on winning control of the United States Senate, the major US stock indexes opened in negative territory, as investors mull what a blue wave would mean for the nation’s businesses and corporate profits.

The Dow Jones Industrial Average opened down 0.05 percent – virtually flat – at 30,377.16.

The S&P 500 – a proxy for the health of US retirement and college savings account – opened down 0.46 percent, while the tech-heavy Nasdaq Composite index opened down a sharper 1.22 percent.

The US Senate runoff races in Georgia have already seen Democratic challenger Raphael Warnock defeat Republican incumbent Kelly Loeffler, according to a projection by the Associated Press news agency.  That puts the Democrats one seat away from wresting control of the Senate – the upper house of the US Congress – away from the Republicans.

The second Georgia runoff race between Democratic challenger Jon Ossof and Republican incumbent David Purdue is still too close to call.

If the nail-biter ends in a double-win for the Democrats, it will dramatically increase President-elect Joe Biden’s chances of enacting his ambitious agenda for reviving the US economy from the ravages of COVID-19 while redressing festering inequalities that have worsened in the pandemic’s wake.

Wall Street investors see both benefits and drawbacks in Biden’s economic blueprint.

On the tax front, the president-elect would like Congress to raise the corporate tax rate from 21 percent to 28 percent, which would cut into corporate earnings.

Biden also wants to raise taxes on the wealthy – specifically people who make more than $400,000 a year- and reinstitute regulations that were rolled back by the Trump administration – which is also viewed by many as a negative for business activity.

But in what could prove a boon for stocks, Biden wants Congress to inject even more stimulus into the US economy with more generous benefits for struggling households and small businesses wrestling with the fallout of COVID-19.

Massive government spending is growth positive for the economy. And a stronger economy can boost corporate profits, creating a windfall for investors.

That prospect is helping to boost financial stocks and other shares that were beaten up last year by the pandemic. Shares of JP Morgan Chase were up 2.24 percent.

Meanwhile, tech stocks – which were on fire last year thanks to the massive shift to remote work and schooling, as well as online shopping – were under pressure on Tuesday.

Investors are also mulling fresh economic data. The US economy unexpectedly shed 123,000 jobs last month, according to the latest ADP National Employment report. That is the first negative reading since April, driven by the reinstatement of business-sapping lockdowns designed to contain spiraling COVID019 infections in the US.