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What Georgia means for the markets.

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With both Democratic candidates in the lead in Georgia, the Nasdaq composite index opened around 1 percent lower on Wednesday on expectations that technology companies could be hurt by higher corporate taxes and stricter antitrust scrutiny.

Wall Street’s investors see Democratic control of the Senate as leading to a large amount of deficit spending in the early days of the Biden administration, a potential boon to the still-struggling American economy.

“We have to expect fiscal policy to be looser than if Republicans had kept their majority,” wrote Ian Shepherdson of Pantheon Macroeconomics in a research note. That could mean higher inflation, he added, which could be why U.S. Treasury bonds also saw selling pressure on Wednesday. The yield on 10-year Treasury notes climbed above 1 percent for the first time since March.

The effect on stocks is more mixed, with diversified indexes like the Dow Jones Industrial Average and S&P 500 flat or up as the tech-heavy Nasdaq sank. Companies whose fortunes are linked closely to the overall economy would benefit from a bigger stimulus and infrastructure spending. Efforts to accelerate vaccination programs would also help industries that rely on in-person interactions get back in business.

Analysts at Goldman Sachs also predicted “greater fiscal policy changes” under a Democratic Congress, focused mainly on stimulus but followed, eventually, by “a limited amount of tax increases.”

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