By Medha Singh and Devik Jain
(Reuters) - Wall Street's main indexes were set for a muted open on Tuesday as investors waited for the outcome of Georgia's Senate runoff elections, which are expected to determine the balance of power in Washington.
While a "blue sweep" of Congress could usher in greater fiscal stimulus to aid the coronavirus-ravaged economy, it could also pave the way for President-elect Joe Biden to push through greater corporate regulation and higher taxes, hurting some areas of the market.
"Investors are taking a wait-and-see attitude ... there's a lot to be concerned about - not only in the U.S. with the elections but also because of the different strains of the virus that are now being reported around the globe," CFRA chief investment strategist Sam Stovall said.
The latest polls from data website 538 https://projects.fivethirtyeight.com/georgia-senate-polls gave a slight edge to both Democratic challengers in their respective races.
The Cboe Volatility Index ticked higher after closing at its highest level in two months in the prior session when Wall Street's indexes dropped to two-week lows on concerns over a persistent surge in coronavirus cases.
While the start of vaccine rollouts and massive monetary support powered the major U.S. stock indexes to record levels recently, the discovery of a more contagious strain of the coronavirus and the latest virus-related curbs have muddied the economic outlook.
Britain began its third national lockdown to fight the spread of a highly contagious variant that threatens to overwhelm the healthcare system. Meanwhile, New York on Monday found its first case of the "UK" variant.
"The market could end up being choppy for much of the first quarter as investors try to digest soft economic data because of the most current lockdowns," Stovall said.
A reading of ISM's manufacturing sector PMI is expected to drift lower for a second straight month in December. The Federal Reserve's minutes from its latest policy meeting as well as monthly employment report are also on tap this week.
At 08:10 a.m. ET, Dow E-minis were down 10 points, or 0.03%, S&P 500 E-minis were down 3 points, or 0.08%, and Nasdaq 100 E-minis were down 14 points, or 0.11%.
Chipmaker Micron Technology Inc (NASDAQ:MU) rose 4% after Citigroup (NYSE:C) raised its rating on the stock to "buy" on expectations of a recovery in demand and pricing for DRAM chips.
U.S.-listed shares of China Telecom Corp Ltd and China Mobile Ltd added about 11% each, while those of China Unicom Hong Kong Ltd advanced 17.6% after the NYSE reversed its decision to delist the stocks.