The highflying technology sector in the U.S. stock market is largely shrugging off increased bipartisan scrutiny by Congress, but a win by Democratic challenger Joe Biden over President Donald Trump in the November presidential election could undercut the market leaders, while the prospect for a boost in infrastructure spending could lift “old-economy” cyclical stocks, according to one analyst.
The broader stock market has bounced sharply after tumbling into a bear market in late February and March as the COVID-19 pandemic forced the shutdown of businesses in the U.S. and around the world. But tech stocks have solidly outperformed as investors favored companies poised to benefit from or remain insulated from the disruption to business and consumer spending.
“Although both political parties are in favor of greater infrastructure spending, the level of government investment would likely be higher under Biden, particularly if the Democrats control both the House and the Senate,” he said. The S&P 500 industrials sector is down more than 11% year to date, while the materials sector is down 1.8%.