Big cap tech investors appear to be liking the prospect for former Vice President Joe Biden to be elected into the White House, Republicans still controlling the Senate and Democrats remaining in charge of the House of Representatives.
In other words, a divided government that can’t agree on what to do with regulation on tech names such as Google, Amazon and Apple or capital gains taxes on the investors that trade these often hot names for riches. And as they bicker in D.C., Big Tech companies and investors are free to keep on raking in the profits.
“I think it has to do with the capital gains tax. It’s not going to go up anywhere near as much as it would have if there had been a ‘blue wave,’” Miller Tabak Chief market strategist Matt Maley tells Yahoo Finance. “Therefore, some sellers stopped selling... and some buyers have gotten a bit more confidence in buying the shares of the mega-cap names. Throw the algos into the mix and the thing has been feeding on itself.”
Indeed the selling in tech that occurred in the days before the election has stopped for now, to Maley’s point.
The Nasdaq Composite stormed out of the gate on Wednesday even as the outcome of the presidential election continues to hang in the balance. As of noon ET, the Nasdaq was up nearly 4% — by far the best-performing of the major equities indices. Strong upside moves just north of 6% are being seen in Google and Amazon. Apple shares were up about 4%, while Facebook is up 7%. The Technology Select Sector SPDR ETF is clinging to a 4% gain in early afternoon trading.
Gains in tech strengthened on afternoon reports that Biden is closing in on the presidency. Widely followed election prediction site Smarkets said the chances of Biden winning now stand at 82%, up sharply from 22% on the night of the election.
“It is all Senate going red — rates collapse and tech goes up,” Evercore ISI strategist Dennis DeBusschere says.
Others on the Street like veteran strategist Brian Belski of BMO Capital Markets add a third reason for the tech strength. If Biden does win, Belski notes it could raise the prospect of renewed COVID-19 lockdowns. That would benefit stay-at-home tech companies such as DocuSign, which interestingly is up 11% in afternoon trading.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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