#Stocks on Wall Street fall on Georgia elections, virus surge

The first trading day of 2021 started off with a bang before falling back to earth as traders grappled with hangover effects of 2020.

The Dow Jones Industrial Average dropped 382.59 points, or 1.3 percent, to 30,223.89 on Monday after hitting a record high in early trading. At one point, the Dow was down more than 700 points. 

Monday marked the first negative start to a year for the Dow since 2016.

The S&P 500 fell 1.5 percent to 3,700.65, and the tech-heavy Nasdaq also slid 1.5 percent to 12,698.45

All three main indexes dropped to two-week lows from record highs reached at the end of 2020, fueled by monetary stimulus and the start of vaccine rollouts.

“The tape is still subject to all the same worries as last year,” said Michael Antonelli, managing director at Baird. “Growing COVID cases, soft economic data, slow rollout of the Vax, stretched valuations. Selloffs can and do happen with no notice, today strikes me as just another soft patch like we’ve seen for months now.”

Also weighing on stocks Monday were Tuesday’s twin Senate races in the battleground state of Georgia that will determine control of the Senate and President-elect Joe Biden’s agenda, including rewriting the tax code, boosting stimulus and infrastructure spending.

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

“Investors are feeling a bit nervous on the first trading day of the New Year and I think this is a confluence of factors,” said Lindsey Bell, chief investment strategist at Ally Invest, in Charlotte, NC.

She cited the rise in COVID-19 cases, the new virus variant that has spread around the world, and the Georgia Senate race.

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

Late Monday afternoon, UK Prime Minister Boris Johnson announced stricter lockdown measures for his country that will extend into mid-February as Britain continues to be ravaged by a new spike and new variant of COVID-19, giving fuel to investor fears that things will get worse before they get better.

“I am hopeful that the economy continues to recover from the worst of 2020,” said Antonelli. “We just need to get to other side of the vaccine and that’s happening fairly slowly to start.”

At 2 p.m., the Dow Jones industrial average fell 456.14 points, or 1.49 percent, to 30,150.34, the S&P 500 lost 56.55 points, or 1.51 percent, to 3,699.52 and the Nasdaq Composite dropped 194.50 points, or 1.51 percent, to 12,693.78.

Some investors are cautious about the pace of economic growth as US 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’s shares extended a meteoric rally to scale a record high after the electric-car maker reported better-than-expected vehicle deliveries in 2020. Tesla stock closed at $729.77 on the day, up $24.10 or 3.4 percent.

With Post Wires