'Biden Effect' Boosts US IT Stocks Soaring... Bank Stocks Plunge

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Although the winner of the U.S. presidential election had not been confirmed even a day after the election ended, the New York stock market showed strong gains centered on tech stocks. U.S. Treasury prices strengthened amid expectations that the scale of future economic stimulus would be reduced.

On the 4th (local time), the Dow Jones Industrial Average rose 367.63 points (1.34%) to close at 27,847.66, the S&P 500 index increased by 74.28 points (2.20%) to 3,443.44, and the Nasdaq index surged 430.21 points (3.85%) to 11,590.78.

The U.S. stock market succeeded in rising again after the presidential election. The Dow index at one point during the session saw a gain of 2.9%.

The sharp rise in the market that day was led by tech stocks. Facebook soared 8.3%, Amazon 6.3%, and Alphabet, Google's parent company, 6.0%, while Microsoft and Apple also posted gains in the 4% range.

The rise in tech stocks that day reflected expectations that government regulations on tech stocks would not be easily implemented as the Republican Party took control of the Senate. Even with Joe Biden winning, the difficulty in reforming tax policies such as corporate tax and capital gains tax also lifted IT stocks.

However, since the confirmation of the president-elect is delayed and legal disputes over the election results are becoming a reality, it is difficult to be optimistic about the future stock market trend. The Wall Street Journal warned that investors may have overlooked the possibility that the president and the majority party in the Senate could be divided, causing confusion in the economic stimulus bill.

Due to negative outlooks on the passage of the economic stimulus bill, U.S. Treasury prices surged. The day before, Treasury yields soared to 0.92% amid the possibility of Donald Trump's victory, but as Biden's chances increased, yields reversed and fell.

With Treasury yields falling, major banks' stock prices plunged 3-5%. Some regional banks experienced nearly a 10% drop.

As the dollar stabilized, December delivery West Texas Intermediate (WTI) crude oil closed at $39.15 per barrel, up 4% ($1.49) from the previous day. December delivery gold closed at $1,896.20 per ounce, down 0.7% ($14.20).