Before the Bell: In the words of the late Ray Charles, "It was Georgia on my mind," and specifically the two contests in the Peach State that could lead to a change in control of the U.S. Senate. And, indeed, after two costly races, it looks as though the Senate might flip to the Democratic Party. This is what we know: Rev. Raphael Warnock has won his race against the incumbent Kelly Loeffler and Jon Ossoff is on the cusp of winning a Senate seat against incumbent David Purdue. However, at this time, the latter race is still too close to call. In reaction, the NASDAQ futures are off between one and two percent (on worries about increasing regulation of tech companies if the Democrats control the Senate), while the futures on the Dow Industrials are treading water. In Washington, Congress is expected to spend the day in debate over the close November 3rd Presidential results in several states, but our understanding is that the disputes are effectively over. In other news, we'll be getting the minutes from the last Federal Reserve meeting later today.

Meanwhile, the stock market, which backtracked on Monday to start the new year on uncertainty about the two Georgia Senate races, began yesterday's session in hesitant fashion. Ultimately, the major averages continued to press higher. As had been the case on Monday, Wall Street was continuing to zero in on the Georgia elections, where polls had shown a dead heat in both contests. That prediction turned out to be on the mark. Worries about the political outcome, though, did not dull the appetite of the bulls, and the stock market held on to a good chunk of the day's advance into the close.

All told, the Dow, once up by 280 points, held onto 168 points of that gain, while increases of 26 points and 121 points, respectively, were tallied by the S&P 500 and the NASDAQ. In all, stocks gained back more than half the week's opening-session loss. Also advancing on the day were oil prices, which reached their highest point of the past 10 months, as Saudi Arabia said it would further curtail output. Importantly, the stock market gains came in spite of the continuing spread of COVID-19 and the consequent lockdowns.

As for the economy, which likely saw a modest slowdown in growth during the fourth quarter and could well see a further diminution in activity in the opening stanza, stocks received a lift from a survey by the Institute for Supply Management, which showed that U.S. manufacturing activity had risen to its highest level in more than two years in December. The companion survey on nonmanufacturing activity will be out tomorrow morning, with the Labor Department reporting on the monthly payroll situation on Friday.

But for one day, at least, the focus will be on politics and the repercussions from yesterday's two Georgia Senate contests, with, as noted, one decided and the other outcome still pending. Stay tuned. – Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.