What the Georgia Election Means for Markets

The politics of reflation matters most for investors, but the long-term impact of elections is often quite different than it appears the day after the vote

Democratic candidate Raphael Warnock is set to be the first Black American to represent Georgia in the Senate, as the AP declared him the winner of a close runoff election over Republican Sen. Kelly Loeffler. Which party will control the chamber is still to be determined. Photo: Raphael Warnock/YouTube

香蕉视频苹果下载Politics often matters to investors, but the way it matters isn’t always obvious.

Compare the market reaction to Donald Trump winning the White House in 2016 and the immediate response to the prospect of a Democrat twin-win in Georgia, which gives the party control of the Senate (just).

In 2016, bank stocks soared while technology stocks initially fell and then lagged behind the market for months. Students of politics had an easy explanation: Republicans favor Wall Street, while Silicon Valley is a progressive bastion.

Easy, but wrong, as the Georgia Senate vote showed. The investor response to the Georgia vote香蕉视频苹果下载 was to buy banks and sell Big Tech.

Sure, politics has shifted, and Facebook and Amazon are now treated as baddies by many on the left. They would be the biggest losers from the corporate-tax cuts that President-elect Joe Biden has promised to partially reverse. The possibility of higher capital-gains taxes with a Democratic-controlled Senate should hit stocks that have left investors sitting on fat unrealized profits, too.

To Read the Full Story

Continue reading your article with
a WSJ membership