[ad_1]
The stock market appears to be okay with the results of the Georgia Senate special election. One of the races was called by mainstream media for Democrat Raphael Warnock, while the other race is too close to be called, but Democrat Jon Ossoff is currently in the lead. If Democrats win both races, the party will have control of the Senate along with the House and the Presidency when President-elect Joe Biden is sworn in later this month.
the Dow Jones Industrial Average (DJ INDICES: ^ DJI) was up nearly 2% as of 1:05 p.m. EST Wednesday, widely beating other major stock indexes. Financial stocks rose, with Goldman Sachs, JPMorgan Chase, American Express, and Travel companies outbreak. Meanwhile, the actions of Coke (NYSE: KO) collapsed after a third analyst downgraded the stock.
Image source: Getty Images.
Financial stocks soar
U.S. government bond prices fell on Wednesday following Georgia’s second round of senatorial elections, which pushed yields to higher levels before the pandemic began. The 10-year Treasury yield exceeded 1% for the first time since March, Financial Times reported.
A wider spread between short-term interest rates and long-term interest rates would help boost bank profits, and higher rates in general are good news for insurance companies who need to invest. floating them in safe assets. Here’s how the Dow’s financial components were doing at the start of Wednesday afternoon:
Data Source: Yahoo! Finance.
Credit card giant Visa is also in the Dow, but the company does not lend money directly. Visa shares rose only 0.3%, underperforming the overall market.
A day is not trending, so these movements can be a case of counting your chickens before they hatch. But if interest rates start to rise, bank stocks could very well do in 2021.
Coca-Cola missing after another downgrade
Coca-Cola shares had fallen 2.7% at the start of Wednesday afternoon after a third downgrade by analysts this week prevented the stock from participating in the big stock rally. The first downward revision took place on Monday due to valuation issues. Tuesday brought another downward revision, this time amid concerns about weak earnings growth after the pandemic.
Wednesday, German Bank piled up with a downgrade of its own rating, causing its rating to drop onto Coca-Cola stock from buy to hold. This third downgrade in as many days was enough to embitter investors on the stock as the stock market as a whole exploded.
Coca-Cola shares haven’t fully rebounded to their pre-pandemic peak, but they have made up much of the lost ground. The recovery from bottoming out earlier this year has come despite still weak sales in the out-of-home segment, which includes restaurants. The restaurant industry could face years of upheaval due to restaurant bankruptcies, so it could be some time before Coca-Cola sales growth returns to normal.
The company is responding to the current environment by abandoning several of its weaker brands. He also announced that he was cutting about 2,200 jobs, including 1,200 in the United States. Sales were down 9% in the third quarter, and the overall unit case volume fell 4%.
Coca-Cola stock is still trading at around 27 times the average of analysts’ estimates for profit for the year after lower ratings this week. This premium valuation may not hold if the company struggles to return to robust growth.
[ad_2]
Source link