Big tech stocks tumble as Wall Street braces for Democratic Senate
Big tech stocks fell sharply Wednesday as Democratic gains in Georgia stoked fears that the feds could tighten regulations on the industry’s dominant players.
Futures contracts linked to the tech-heavy Nasdaq 100 index tumbled about 1.3 percent as of 8:12 a.m. with Democrats poised to flip both the Peach State’s Senate seats — likely giving them control of a chamber that could help President-elect Joe Biden rein in tech titans and hike corporate taxes.
Shares in the so-called FAANG tech stocks — Facebook, Amazon, Apple, Netflix and Google parent Alphabet — all fell further than the Nasdaq in premarket trading. Facebook was the biggest loser, dropping about 2.4 percent to $264.40 as of 8:19 a.m.
“With a Senate now likely controlled by Democrats we would expect much more scrutiny and sharper teeth around FAANG names with potential (although still a low risk) legislative changes to current anti-trust laws now on the table,” said Dan Ives, a tech analyst at Wedbush Securities.
Lawmakers on both sides of the aisle have ramped up pressure on big tech companies in recent years over concerns that they’ve used their power and size to squash competition.
Federal and state authorities have brought antitrust lawsuits against Google and Facebook in recent months. Moreover, Biden has expressed support for revoking Section 230 of the Communications Decency Act, which shields social networks like Twitter and Facebook from legal liability for their users’ posts.
But it may not be easy for Democrats to crack down on tech giants because they will control Congress by such a small margin, according to David Bahnsen, chief investment officer of The Bahnsen Group. Warnock and Ossoff’s victories would give Democrats and Republicans 50 Senate seats each, with Democratic Vice President-elect Kamala Harris poised to serve as a key tie-breaking vote.
“The Democrats’ small lead in both the Senate and the House will make it tougher than many believe to pass tax hikes, impose regulation and enact some of the other market unfriendly policies that investors have been worried about under a Blue Wave scenario,” Bahnsen said.
“I suspect the initial market reaction in the tech sector to the Georgia Senate results is more of a growth-into-value story rather than a tech regulation story, as there is arguably greater appetite for Silicon Valley regulation in the GOP.”
With Post wires