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Investing.com – The Dow hit a record high Wednesday, as hopes for further fiscal stimulus overshadowed fears of increased regulations on big tech and higher taxes as Democrats close in on victories in the Georgia runoff elections that will give them control of the Senate.
The Dow Jones Industrial Average surged 1.93%, or 587 points. The S&P 500 was up 1.40%, while the Nasdaq Composite added 0.57%.
Democrat Rev. Raphael Warnock unseated Republican Senator Kelly Loeffler in one of the Georgia runoff elections, while Democrat Jon Ossoff is reportedly in the lead against Republican David Perdue.
A victory in both races would see the Democrats match the 50 seats the Republics hold in the Senate. But Vice President-elect Kamala Harris will have the tie-breaking vote, paving the way for Democrats to carry out their legislative agenda amid control of both chambers of Congress and the White House.
Senate Minority Leader Chuck Schumer said that increasing stimulus checks to $2,000 a week would be one of the first legislative proposals.
But some on Wall Street have suggested the stimulus-led boost to the economy could trigger the Federal Reserve to tighten policy sooner than expected.
The legislative agenda could “close the output gap by roughly four to six quarters,” ahead of schedule, improve the unemployment rate and set inflation on path to reach 2%, which which “will put the Fed in a position to lift off in early 2023, a full year ahead of our previous forecast,” Jefferies (NYSE:JEF) said in a note.
Financials led the broader market higher, with banking stocks in the ascendency – ahead of the quarterly earnings report due next week – driven by a jump in Treasury yields as the United States 10-Year rose above 1% for the first time since March.
Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC) rallied 7%, while JPMorgan (NYSE:JPM) was up 5%.
Higher yields tend to boost the net interest income banks earn on their loan products.
Energy stocks continued their gains from a day earlier, as oil prices tracked higher on data showing a larger-than-expected draw in weekly crude supplies.
Crude inventories fell 8 million barrels, compared with a forecast for a 2.1 million-barrel decline, according to the Energy Information Administration.
Tech lagged the broader move higher as investors fear big tech is set to come under increasing regulatory scrutiny with democrats at the legislative helm.
Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) the so-called Fab 5, which make up for about 25% of the S&P 500, traded in the red.
