UPDATE: Markets Rally From Shaky Start After Georgia Senate Runoff Results

The market reaction changed after a shaky start to trading on Wall Street, rallying after the results of the Georgia runoff trickled in on Wednesday.

Following news of a possible sweep of the two seats at stake in Georgia, which would swing control of the Senate to Democrats, markets initially dropped over concerns of what a Democrat-controlled House, Senate and White House would mean to big tech.

But investors later poured into industrial and energy stocks amid signs Democrats in the U.S. would push ahead with big spending on infrastructure, helping the markets into the green.

All major U.S. indices were trading in positive territory midway through the trading session on Wednesday, with the Dow Jones Industrail average posting gains of around 1.7% as of 11 a.m. ET. Construction equipment manufacturer Caterpillar (CAT) was among the big movers, with shares jumping some 6% to trade at $194.70.

Early results from two Senate races in Georgia show at least one seat in the chamber moving into the column for the Democrats. Democratic contender Rev. Raphael Warnock beat Sen. Kelly Loeffler in the context, though the race between Democrat Jon Ossoff and Republican David Perdue, seeking a second term after his term expired Sunday, remains too close to call.

A sweep for the Democrats would support an initiative from President-elect Joe Biden to pump more money into the economy. Investors earlier in the session, however, fretted over a possible crackdown on companies like Google, Facebook and Amazon, brusing the tech-heavy Nadsaq before the opening bell.

Futures on the tech-heavy Nasdaq were down some 1.4% at 8 a.m. EST. By mid-day, shares in Apple (AAPL) were moving slightly lower, while renewable energy company First Solar (FSLR) saw shares jump nearly 8%, indicative of Biden's pledge to push for greener energy options.

Should Ossoff emerge victoriously, Democrats would control both the House and Senate, making it easier for Biden to advance a stronger stimulus package, which would buoy investors, but also clamp down on big tech and enact higher corporate taxes.

“We’re seeing a bit of a sell-off in Nasdaq [futures] because that’s where the outright war is going to come in terms of what the Democrats have said about breaking up big tech,” Keith Temperton, an equity sales trader at Forte Securities in London, told the Reuters on Wednesday.

U.S. lawmakers last year grilled tech giants such as Apple, Facebook, and Google on antitrust issues. Ten U.S. states last month filed lawsuits against Facebook and Google, accusing the companies of working together to fend off antitrust complaints. A separate case was filed against Facebook over its acquisition of two rival messaging applications.

Biden said on the campaign trail that he would increase the corporate income tax rate from 21% to 28% once in office. Companies generating profits of more than $100 million per year could also be subject to an additional income tax.

According to the non-profit Tax Foundation, Biden’s tax plan could result in a slight contraction in the U.S. economy. That, coupled with a possible crackdown on big tech, has left investors wary.

"I think you could see some aggressive selling, at least by traders, if there is that blue wave," Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, told Reuters in a separate report.

The movement in markets followed a report Tuesday from the World Bank that forecast 4% growth in the global economy in 2021. Gross domestic product in the U.S. is expected to expand by 3.5% this year, not enough to overcome the 3.6% contraction last year.