Wall Street struggles higher at the opening bell

The main indices on Wall Street have made a slow but positive start to Tuesday’s session as traders seemed content to mostly hold fire ahead of the outcome of the Georgia runoff elections.

In the first minutes of trading, the Dow Jones Industrial Average was up 0.1% at 30,261 while the S&P 500 rose 0.07% to 3,703 and the Nasdaq climbed 0.08% to 12,709.

“Given the ambitious agenda of the incoming administration, there’s a lot hanging on the vote, the outcome of which will become clear over the coming days. From a markets perspective, the nervousness we’re seeing may reflect the perceived improved chances of the Democrats in the two seats, with a clean sweep meaning higher taxes and more regulation”, said OANDA’s Craig Erlam.

“Of course, it could also mean another substantial spending package which has little chance of getting through a Republican controlled Senate. Should the Democrats pull off the, once considered, unlikely double win, stock markets may come under some pressure initially, with the dollar seeing some reprieve”, he added.

8.00am: Wall Street set for muted start

US equities are set for an indecisive start, as traders wait for the outcomes of the runoff elections in Georgia.

Spread betting quotes suggest the Dow Jones Industrial Average will open around 20 points lower at 30,204 while the broader-based S&P 500 is expected to open little changed.

The Nasdaq Composite should shed around 12 points at 12,686.

The run-off elections in the state of Georgia are taking place today and will determine who controls the Senate.

“The Georgia run-offs are today and although the results are expected the same day it could take longer if the race is tight. PredictIt.com currently signals the probability of a Democratic-controlled senate as 48%,” said Rony Nehme, the chief market analyst at Squared Financial.

The elections, according to Marshall Gittler at BDSwiss, are “a major, major event for the markets”.

“Right now the 100-member Senate is 50-48 in favour of the Republicans. If the Republicans win at least one of the two seats that are up for grabs, they will have control of the Senate. Since all spending bills have to pass both Houses of Congress, they will be able to block President-elect Biden and the Democrats from passing their agenda. (Cue The Crazy World of Arthur Brown),” Gittler explained.

“If this happens, watch for them to suddenly get all concerned about the budget deficit and passionate about the need to cut back on social programmes to get spending under control – never mind their huge tax cut for the wealthiest & companies in 2017 that sent the deficit soaring then. Biden would also have problems getting Senate approval for his cabinet appointments, judges and any Federal Reserve Board nominees,” Gittler continued.

“If however the Democrats win both seats, then the Senate will be 50-50 and Vice-President Elect Harris will have the tie-breaking vote,” Gittler said.

Economics-wise, we have the Institute for Supply Management (ISM) manufacturing purchasing managers’ index (PMI) for December due out this afternoon. Economists are expecting a reading of 56.7, versus a previous reading of 57.5.

Four things to watch for on Tuesday:

• Traders may be keeping an eye on shares in US-listed Chinese telecom firms China Mobile Ltd (NYSE:CHL), China Telecom Corp Ltd (NYSE:CHA) and China Unicom (Hong Kong) Ltd (NYSE:CHU) after the New York Stock Exchange reversed a decision made last week to delist the three companies following moves by the US government to block investment in firms deemed to be controlled by the country’s military 
• Early January continues to be a light period for earnings, however, some investors may be waiting for egg producer Cal-Main Foods Inc (NASDAQ:CALM) to crack open its figures for the second quarter
• Meanwhile, water services firm Pure Cycle Corp (NASDAQ:PCYO) will deliver first quarter numbers
• The macro diary is also looking a little sparse, although US business optimism data for December and job openings data for November may provide a little extra clarity on the US economy ahead of the non-farm payrolls on Friday

Story by ProactiveInvestors