Investors in the industry seem to be concerned that the combination of Joe Biden’s victory in the White House and the likelihood that Democrats will control both houses of Congress could lead to more regulations for big tech companies, higher corporate taxes and increased antitrust scrutiny. .
But given the narrow majority of the party in both chambers, it is not clear whether any of these things will happen.
“Democrats’ small leadership in the Senate and House will make it more difficult than many believe to approve tax increases, impose regulations and enact some of the other hostile market policies that concern investors,” said David Bahnsen, director of investments with the Group Bahnsen said in a report on Wednesday.
“I suspect that the initial market reaction in the technology sector to the results of the Georgia Senate is more a history of growth in value than a history of technology regulation, as there is arguably a greater appetite for Silicon Valley regulation in the GOP” , he added. .
But as technology stocks plummeted on Wednesday morning, many sectors were emerging in the hope of significant legislative and political changes in Washington.
The market also seems to be betting that the new regime in DC may finally get approval for a major infrastructure project, which could add jobs and stimulate the general US economy.
“A Biden honeymoon with a Democratic Congress led by Nancy Pelosi and Charles Schumer would likely lead to more fiscal stimulus and infrastructure spending,” said Philip Orlando, chief stock market strategist at Federated Hermes, in a report on Tuesday in the evening. “This would serve as a temporary sugar spike for inventories in 2021.”