NEW YORK (Reuters) – Stocks on Wall Street closed sharply lower on Monday, sliding off all-time highs on the first trading day of the year, as risk appetite ebbed away in the upcoming elections in Georgia and the ongoing rise in coronavirus cases.
The Dow, which hit an all-time high earlier in the session along with the S&P 500, was also dragged down more than 4% in Boeing Co’s stock after Bernstein downgraded his rating to “underperform”, citing to concerns about cash flow.
All three main indices hit two-week lows, with record highs in the Dow and S&P 500, extending a 2020 rally fueled by monetary stimulus and the start of vaccine rollouts.
The fate of US President-elect Joe Biden’s agenda, which includes rewriting the tax code, boosting incentives, and infrastructure spending, hinges firmly on Tuesday’s two Senate games in the battlefield state of Georgia, which will determine control of the chamber.
The Wall Street anxiety meter hit its high in two weeks on Monday.
“Stocks are pulling back from a great year of profit,” said Brian Reynolds, chief market strategist at Reynolds Strategy.
‘We start with a virus that got out of hand. We will likely end 2021 with a virus that could be under control by then. How we get from start to finish will be filled with frequent relapses, as people will look at short-term headlines, ”he added.
The total number of deaths in the US from COVID-19 has reached more than 350,000.
Nearly all S&P sectors declined, with real estate, utilities and industrials showing the strongest declines. Consumer discretionary and materials reached record highs during early trading.
The Dow Jones Industrial Average fell 382.59 points or 1.25% to 30,223.89, the S&P 500 lost 55.42 points or 1.48% to 3,700.65 and the Nasdaq Composite fell 189.84 points or 1.47 % to 12,698.45.
The S&P 500 and the Dow posted their biggest daily declines since late October, while the Nasdaq posted the biggest loss since December 9.
“Investors are at a point where they want to take a breather while looking at all the different things coming up in the new year,” said Lindsey Bell, lead investment strategist at Ally Invest in Charlotte, North Carolina.
In terms of data, U.S. manufacturing activity recovered at its fastest pace in more than six years in December, a poll on Monday found. It comes on the heels of optimistic studies of factory operations in Europe and Asia earlier today.
Some investors are cautious about the pace of economic growth as unemployment claims in the US remain stubbornly high, while a new round of pandemic-related restrictions last month and a new variant of the coronavirus have shadowed the outlook.
Shares of Tesla Inc extended a meteoric rally to hit an all-time high after the electric car manufacturer reported better-than-expected vehicle deliveries in 2020.
Shares of FLIR Systems Inc were up more than 19% after Teledyne Technologies Inc agreed to purchase the thermal imaging camera supplier for $ 8 billion in cash and stock. Teledyne’s shares, however, fell 7.5%.
Diminishing problems outpaced the advance on the NYSE by a ratio of 2.14 to 1; on Nasdaq, a 1.43-to-1 ratio was in favor of declines.
The S&P 500 posted 54 new highs in 52 weeks and no new lows; the Nasdaq Composite registered 151 new highs and 19 new lows.
The volume on the US stock exchanges was 14.15 billion shares, compared to the average of 10.94 billion for the full session over the past 20 trading days.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Marguerita Choy