Tech Stocks Slide as Wall Street Eyes Democrat-Controlled Senate
Shares of large technology companies including Apple, Google, Amazon and Facebook fell in pre-market trading Wednesday, as the Senate runoff races in Georgia were leaning toward giving Democrats control of the chamber — raising concern among investors over the prospect of new regulatory actions against tech giants.
Facebook’s stock was down 2.9% before the bell, Amazon and Apple were -2%, and Alphabet (parent of Google) was -1.9%. Futures for the tech-centric Nasdaq were off 1.6% before the market open while Dow futures were flat.
Early Wednesday, Rev. Raphael Warnock was announced as the projected winner of the first of the two senate runoff elections in Georgia, making him the state’s first Black senator. The contest between incumbent GOP Sen. David Perdue and Democrat Jon Ossoff remained too close to call, although Ossoff held a slim lead.
For tech investors, the prospect of a Democrat-controlled Senate — along with a blue majority in the House and Joe Biden in the White House — is “a clear negative,” Wedbush Securities analyst Dan Ives wrote in a research note.
“[U]ltimately with a Senate now likely controlled by Democrats we would expect much more scrutiny and sharper teeth around FAANG [Facebook, Apple, Amazon, Netflix, Google] names with potential (although still a low risk) legislative changes to current antitrust laws now on the table,” Ives wrote.
The economic power of Big Tech became a much bigger political flashpoint in 2020 on both sides of the aisle, although for different reasons.
Last October, the House Judiciary Committee issued a report summarizing its antitrust probe into Apple, Amazon, Facebook and Google. The 449-page report by the Democrat-led committee urged Congress to enact new laws to curb the companies’ power, including laws that would further empower regulators to crack down on anticompetitive behavior as well as impose “structural separations” on tech giants to prohibit dominant platforms from entering adjacent lines of business.
“We would expect a tech sell-off this morning, as the Street factors added Beltway risk into the tech sector with a delayed Blue Wave now likely coming to fruition and tech stocks caught in this political shocker,” Ives wrote in his note.
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