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Company News

RPT-UPDATE 1-Wall St seeks safety of Big Tech bets as election hangs in the balance

(Repeats to add “Update 1” tag in headline, no change to text)

Nov 4 (Reuters) - The United States’ big technology names led gainers on Wall Street on Wednesday, as investors sought the security of this year’s big stay-at-home corporate success stories in the face of a presidential election set to go down to the wire.

Gains for Joe Biden in vote tallies in the swing states of Wisconsin and Michigan cooled initial selling of renewable energy, marijuana and other companies seen as potential beneficiaries of a sweeping Democrat victory.

Overall, futures for the tech-heavy Nasdaq 100 jumped 3.7%, with Dow and S&P 500 futures also trading in positive territory in a volatile session.

Following are major movers as traders and investors in New York’s main stock indexes digested the results and President Donald Trump’s chances of beating Biden to win a second term.

ENERGY

Traditional energy companies, which could enjoy a lighter regulatory and tax environment under a second term for Trump, gained, with the SPDR S&P Oil & Gas Exploration & Production ETF up 2.3%.

Stocks of solar energy-based firms such as First Solar , Enphase and JinkoSolar traded between 3% and 4.7% lower.

The Invesco Solar ETF dropped 3%, handing back some of a more than 40% gain from September lows, while the iShares Global Clean Energy ETF, another instrument representing the developing sector which Biden had made a key plank of his agenda, fell 2%.

“The fact that Republicans are likely to retain a Senate majority would make it virtually impossible for Biden (if he wins) to enact his major climate reforms,” said Raymond James analyst Pavel Molchanov.

“There is virtually no chance of a net zero emissions target passing through a Republican-controlled Senate.”

MARIJUANA

Major cannabis producers had surged after the vice presidential debate, when Biden’s partner on the ticket Kamala Harris said marijuana would be decriminalized at the federal level under their administration.

But with exit polls surprising markets, the ETFMG Alternative Harvest ETF slipped 1.7%.

Shares of Tilray as well as U.S.-based listings of Canada’s Canopy Growth, Cronos and Aurora Cannabis fell between 3% and 6.3%.

TECHNOLOGY

Big tech companies, which have benefited from Trump’s softer stance on regulation and anti-trust policies as well as a tax cut that targeted U.S. big business, rose between 3% and 5.3%.

The Invesco QQQ ETF and Technology Select Sector SPDR Fund were both up around 3%.

Microsoft, Intel and IBM rose between 0.4% and 2.2%, while FAANG stocks Facebook, Apple , Amazon, Netflix and Google gained around 2.3% each.

“With a Trump presidency more likely than expected and a more evenly balanced Senate, any big change like higher capital gains tax or a legislation that regulates the tax more aggressively is less likely, and that’s why tech is doing better,” said TS Lombard’s head of strategy, Andrea Cicione.

DEFENSE

The iShares US Aerospace & Defense was set for its best day in nearly three months, while the SPDR S&P Aerospace & Defense ETF looked to post its biggest one-day gain since mid-July.

A second-term for the Trump administration is expected to mean continued higher spending on defense.

Contractors Northrop Grumman, Lockheed Martin and Raytheon rose between 1.4% and 2.7%.

PRIVATE PRISON OPERATORS

Private prison operators Geo Group and CoreCivic Inc gave up early gains as Biden, who has committed to ending the federal government’s use of private prisons, was reinstalled as the favorite to win the election by online betting markets.

BANKS

Most of Wall Street’s big banks slipped.

“Now there will be a split Congress and, therefore, a lot more fiscal restraint and those expectations of higher inflation and high yields favoring banks and financials will have to be reassessed,” Cicione said.

JP Morgan lost 1.6% while Bank of America, Citi and Wells Fargo -- listed under JP Morgan’s basket of stocks that should gain from a Trump victory -- fell more than 1%.

PHARMACEUTICALS

Pfizer, Merck & Co, Biogen, Regeneron Pharmaceuticals, Bristol Myers and Johnson & Johnson all rose between 1.6% and 3.7%.

Analysts at SVB Leerink said a Trump win with a close Senate race was almost an ideal outcome for biopharma and that an effectively split Senate would likely shield the industry from any sweeping reforms.

Reporting by Susan Mathew, additional reporting by Trisha Roy and Arunima Kumar in Bengaluru; editing by Patrick Graham and Bernard Orr

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