Wall Road begins a sell-off in 2021. Dow misplaced greater than 600 factors
Shares fell on Monday, the first day of trading of 2021, amid concerns over global coronavirus cases and the Georgia runoff.
The Dow Jones Industrial Average was 664 points lower, or 2.2%. The S&P 500 was down 2.3% and the Nasdaq Composite was down 2.4%. Both the Dow and S&P 500 hit record highs at the Open. This would be the first time since 2016 that the market closed lower on the first trading day of the year.
The Dow and S&P 500 were on their way to their biggest one-day sell-off since October 28, while the Nasdaq was heading for its worst daily performance since October 30.
“In my day I’ve seen a lot of wild rallies with lots of mispriced stocks, but they all have one thing in common. Eventually they hit a wall and make a painful correction,” CNBC billionaire Carl Icahn Scott Wapner said Monday.
Coca-Cola and Boeing were the worst performing Dow components, falling 4.9% and 4.8% respectively. Real estate fell 3% to lead the S&P 500 down.
Wall Street is keeping an eye on Georgia as the state prepares for Tuesday’s Senate runoff, which could give Democrats a majority in the chamber.
“If the GOP wins just one seat, they will likely block some of Biden’s more ambitious proposals, but a democratic run of both elections could give the new administration a free hand on its political agenda,” wrote Jason Pride, CIO for personal wealth at Glenmede.
John Stoltzfus, chief investment strategist at Oppeneheimer, said Monday the S&P 500 could fall 10% if the Democratic candidates win the Georgia runoff.
“Not just some people on Main Street and Wall Street believe that if the Democrats took control of the Senate and House of Representatives tomorrow, it would benefit badly for companies with the likelihood of corporate tax rates rising significantly could, “said Stoltzfus.
The decline on Monday was also due to traders worried about the growing number of coronavirus cases around the world.
Data compiled by Johns Hopkins University showed that more than 20 million Covid-19 infections have been confirmed in the United States. Several cases of a new strain of coronavirus have also been confirmed across the country. More than 85 million cases have been confirmed worldwide. In the UK, the BBC reported that the country was imposing Tier 4 restrictions across the country.
The 30-stock Dow ended up 7.3% last year and the S&P 500 rose 16.3% during that time. At one point in 2020, the two market benchmarks fell more than 30% as the coronavirus pandemic devastated the global economy.
The real highlight of 2020 was the Nasdaq Composite, which rose 43.6% for its biggest gain since 2009. The outperformance on the Nasdaq was due to investors and traders flocking into technology stocks during the Covid-19 outbreak.
Unprecedented fiscal and monetary support to the economy – along with the development and launch of several Covid-19 vaccines – helped the market recover from its massive decline and return to an all-time high.
“The stock market is positioned for further gains in 2021 based on the two pillars of coordinated fiscal and monetary policies from the US Treasury Department and the Federal Reserve Board and a successful introduction of COVID vaccines,” said Marc Chaikin, CEO of Chaikin Analytics . “However, we envision some bumps along the way.”
The rollout of several Covid-19 vaccines in the US has recently slowed due to supply shortages.
Moncef Slaoui, the head of Operation Warp Speed, said Sunday the US could accelerate its vaccine rollout by giving half doses of the drug Moderna developed to a group of Americans. “We know that the Moderna vaccine, which gives half the dose to people between the ages of 18 and 55, creates an identical immune response to the 100-microgram dose,” Slaoui said.
Moderna shares gained 8.1%.
Tesla stock rose 3.9% on Monday, hitting an all-time high after the electric automaker announced on Saturday that it had shipped 180,570 electric vehicles in the most recent quarter, beating expectations.
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