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Wall Street Ends Lower on Worries over Georgia Elections

NEW YORK, Jan 4 (Reuters) - Shares on Wall Street closed sharply lower on Monday, sliding from all-time peaks on the first trading day of the year, as risk appetite ebbed amid upcoming runoff elections in Georgia and the persistent surge in coronavirus cases.

The Dow, which touched a record high earlier in the session along with the S&P 500, was also dragged down by a more than 4% fall in Boeing Co’s shares after Bernstein cut its rating to “underperform,” citing concerns about cash flow.

All three main indexes 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 U.S. President-elect Joe Biden’s agenda, meanwhile, including rewriting the tax code, boosting stimulus and infrastructure spending hinges firmly on Tuesday’s twin Senate races in the battleground state of Georgia that will determine control of the chamber.

Wall Street’s fear gauge touched a two-week high on Monday.

“Stocks are pulling back from a stunning year of gains,” said Brian Reynolds, chief market strategist, at Reynolds Strategy.

“We’re starting off with a virus out of control. We’ll probably going to end 2021 with a virus that could be under control by that time. How we get from start to finish will be filled with frequent pullbacks because people will be looking at short-term headlines,” he added.

Total U.S. deaths from COVID-19 have reached more than 350,000.

Almost all S&P sectors dropped with real estate, utilities and industrials posting the sharpest percentage declines. Consumer discretionary and materials hit all-time highs in early trading.

Unofficially, the Dow Jones Industrial Average fell 387.92 points, or 1.27%, to 30,218.56, the S&P 500 lost 56.08 points, or 1.49%, to 3,699.99 and the Nasdaq Composite dropped 191.23 points, or 1.48%, to 12,697.06.

“Investors are at a point where they want to take a breather while they assess all the different things coming in the new year,” said Lindsey Bell, chief investment strategist at Ally Invest, in Charlotte, North Carolina.

On the data front, U.S. manufacturing activity picked up at its briskest pace in more than six years in December, a survey showed on Monday. It comes on the heels of upbeat factory activity surveys across Europe and Asia earlier in the day.

Some investors are cautious about the pace of economic growth as U.S. jobless claims remain stubbornly high, while a new round of pandemic-related restrictions last month and a new variant of the coronavirus have cast a shadow on the outlook.

Tesla Inc’s shares extended a meteoric rally to scale a record high after the electric-car maker reported better-than-expected vehicle deliveries in 2020.

Shares of FLIR Systems Inc jumped after Teledyne Technologies Inc agreed to buy the thermal imaging camera supplier for $8 billion in cash and stock. Teledyne’s shares dropped as well.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Marguerita Choy)

Source: Reuters


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