The stock market appears to be on board with the results of the special Senate elections in Georgia. One of the races has been called by major media outlets for Democrat Raphael Warnock, while the other race is too close to call but has Democrat Jon Ossoff 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 (^DJI -0.75%) was up nearly 2% at 1:05 p.m. EST Wednesday, soundly beating the other major stock indices. Financial stocks were up big, with Goldman Sachs, JPMorgan Chase, American Express, and The Travelers Companies surging. Meanwhile, shares of Coca-Cola (KO) slumped after a third analyst downgraded the stock.

A rocket launching.

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Financial stocks soar

Prices of U.S. government bonds sank on Wednesday following the runoff senate elections in Georgia, which pushed yields to the highest levels since before the pandemic began. The 10-year Treasury yield topped 1% for the first time since March, the Financial Times reported.

A bigger spread between short-term interest rates and long-term interest rates would help boost profits at banks, and higher rates in general are good news for insurance companies that need to put their float into safe assets. Here's how the Dow's financial components were faring by early Wednesday afternoon:

Stock

Change

Goldman Sachs (GS -0.07%)

5.7%

JPMorgan Chase (JPM 0.41%)

5.3%

American Express (AXP 0.29%)

5.1%

The Travelers Companies (TRV 0.32%)

3%

Data source: Yahoo! Finance.

Credit card giant Visa is also in the Dow, but the company doesn't lend money directly. Shares of Visa were up just 0.3%, underperforming the broader market.

One day doesn't make a trend, so these moves may be a case of counting your chickens before they hatch. But if interest rates do begin to trend upward, bank stocks could do very well in 2021.

Coca-Cola misses out after another downgrade

Shares of Coca-Cola had tumbled 2.7% by early Wednesday afternoon after a third analyst downgrade this week prevented the stock from participating in the broad stock market rally. The first downgrade came on Monday on valuation concerns. Tuesday brought another downgrade, this time due to concerns about weak earnings growth after the pandemic.

On Wednesday, Deutsche Bank piled on with a downgrade of its own, knocking its rating on Coca-Cola stock from buy to hold. This third downgrade in as many days was enough to sour investors on the stock as the broader stock market soared.

Shares of Coca-Cola haven't fully rebounded to their pre-pandemic high, but they've made up much of the lost ground. The rally since bottoming out earlier this year came despite persistently weak sales in the out-of-home segment, which includes restaurants. The restaurant industry may be set to face years of upheaval as restaurants fail, so it could be quite some time before Coca-Cola's sales growth gets back to normal.

The company is responding to the current environment by dropping many of its weaker brands. It has also announced that it is cutting around 2,200 jobs, including 1,200 in the U.S. Sales were down 9% in the third quarter, and global unit case volume dropped 4%.

Coca-Cola stock still trades for around 27 times the average analyst estimate for full-year earnings following this week's downgrade-driven slump. That premium valuation may not hold up if the company struggles to return to robust growth.