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* J&J falls after COVID-19 vaccine study data
* GameStop plays a big flight as brokers ease restrictions
* Honeywell down after earnings (updates before market close)
NEW YORK, Jan. 29 (Reuters) – US stock indices fell, closing Friday’s session with the biggest weekly drop since October, as investors probed the fallout from the results of Johnson & Johnson’s COVID-19 vaccine trials, amid deadlock between Wall Street hedge funds and small, retail investors contributed to the volatility.
Johnson & Johnson fell among the biggest weights on both the Dow and S & P500 after the drug manufacturer said its single-dose vaccine was 72% effective in preventing COVID-19 in the United States, at a lower rate of 66% worldwide.
The results are comparable to the high bar set by two authorized vaccines from Pfizer Inc / BioNTech SE and Moderna Inc, which were approximately 95% effective in preventing symptomatic disease in key studies when given in two doses. Moderna shares climbed while Pfizer shares changed little.
Concerns about a brief tightness that began earlier this week resurfaced after an army of private investors returned to trade stocks in stocks such as GameStop Corp and Koss Corp, which shot higher after brokers, including Robinhood, imposed some of the restrictions on them. on the trade, relaxed.
“The general picture is that if there is bad news to suggest or indicate that there could be a longer hibernation period for us to be indoors and not consume or spend money, which will cause the market to decline and many people to go on the sidelines especially with that news, ”said Sylvia Jablonski, chief investment officer at Defiance ETFs in New York.
“And then what’s the matter with (Gamestop) and all those things, people are a little bit scared to act.”
The surge in volatility has led to a massive increase in volume, totaling more than 20 billion shares in each of the past two sessions on US stock exchanges for the most active trading days ever dating back to 2014, according to Refinitiv data.
The U.S. Securities and Exchange Commission said it was keeping a close eye on all potential violations, both among brokers and social media traders.
Unofficially, the Dow Jones Industrial Average fell 629.89 points, or 2.06%, to 29,973.47, the S&P 500 lost 74.61 points, or 1.97% to 3,712.77, and the Nasdaq Composite dropped 273.58 points , or 2.05%, to 13,063.58.
All three main indices have experienced their largest weekly decline since late October.
Market participants have speculated that the volatility resulting from the short squeezes has put investor favorites, including Apple Inc, under pressure as hedge funds sell to cover billions of dollars in losses.
Apple shares fell while Microsoft also fell.
While concerns about rising COVID-19 cases and the bumpy vaccine rollout have left investors suspicious of a downturn and an increase in near-term volatility, the start of quarterly earnings has allayed some concerns about rising stock valuations.
Of the 184 companies in the S&P 500 that reported earnings through Friday morning, 84.2% exceeded analyst expectations, well above the 75.5% success rate over the past four quarters, according to data from Refinitiv.
Honeywell International declined after a 13% decline in quarterly profit.
The first known US cases of the South African COVID-19 variant, found to be partially resistant to current vaccines and antibody treatments, were discovered in South Carolina on Thursday.
Data showed that fourth-quarter U.S. labor costs rose more than expected amid a wage hike, supporting the view that inflation could accelerate this year, while another report showed U.S. consumer spending in December for a second month on row down.
Reporting by Chuck Mikolajczak; edited by Diane Craft