U.S. Stocks Wobble to Start 2021
January 04 2021 - 10:23AM
Dow Jones News
By Joanne Chiu and Anna Hirtenstein
U.S. stocks wobbled between small gains and losses on the first
trading day of the year, with investors hoping the rollout of
coronavirus vaccines will help the economy slowly recover ground in
the coming months.
Major indexes opened higher but wobbled shortly after the
opening bell. The Dow Jones Industrial Average slipped 54 points,
or 0.2%. The S&P 500 was flat, and the Nasdaq Composite
advanced 0.1%.
The Dow and S&P 500 closed at record levels Dec. 31.
Investors are starting the new year on an optimistic note.
Although the novel coronavirus pandemic has continued to spread,
with U.S. hospitalization rates climbing to a record high Sunday,
many money managers believe economic activity will be able to pick
up this year.
"There is still really bad news on the virus, but the market is
looking through that because of the vaccines," said Fahad Kamal,
chief investment officer at Kleinwort Hambros. "We are certainly
positively tilted, given the expected economic recovery,
historically low interest rates, a lot of fiscal spending and
monetary policy to come: all of that positivity remains."
Tesla climbed 1.8% after the electric-car maker said it
delivered a record 499,550 cars last year, just shy of its half a
million target.
Roku added 1.4% following reports that it is in talks to acquire
the content catalog of short-form streaming service Quibi.
Overseas, the pan-continental Stoxx Europe 600 rose 1.4%.
The U.K.'s FTSE 100 was the best-performing major index in
Europe, jumping 2.7%. The trade deal struck on Christmas Eve
between the U.K. and the European Union is likely delivering a
boost to British stocks, said Sebastian Mackay, a multiasset fund
manager at Invesco.
"A lot of the tail risks of a no deal [Brexit] have been removed
now. This will lead people to start dipping their toes again in the
U.K. market," he said.
Investors also said they were reassured by newly released data
on the health of the manufacturing sector. Factories in Asia and
Europe increased their output as 2020 drew to a close, according to
surveys of purchasing managers that showed strong rises in activity
during December.
"We're going through renewed lockdowns, which is curtailing
activity to some extent, but what we've seen through the pandemic
is that manufacturing activity tends to hold up quite well," Mr.
Mackay said.
Among European equities, British gaming company Entain soared
28% after it confirmed a takeover bid from MGM Resorts
International. The offer values the company at GBP8.09 billion,
equivalent to $11.06 billion.
Most major stock benchmarks in the Asia-Pacific region advanced.
South Korea's Kospi Composite led gains, rising 2.5%.
China's Shanghai Composite gained 0.9%, even after a private
survey showed China's manufacturing activity moderated in December
due to weak demand for the country's exports.
Ben Luk, senior multiasset strategist at State Street Global
Markets, said the data pointed to continued fragility in the
Chinese economy. But he said that helped ease concerns that China's
central bank would act prematurely to tighten monetary policy.
Japan's Nikkei 225 dropped 0.7% by the end of trading after
Prime Minister Yoshihide Suga said he might declare a state of
emergency in Tokyo and surrounding areas as new coronavirus
infections continue to rise.
Paul Sandhu, head of multiasset quant solutions for the
Asia-Pacific region at BNP Paribas Asset Management, said markets
in Asia had largely picked up where they left off in 2020, as
investors continue to favor riskier assets like equities in
emerging markets such as China, South Korea and Taiwan. He said he
expected Asia to be one of the most robust parts of global markets,
due in part to its relative success in containing the
coronavirus.
Akane Otani contributed to this article
Write to Joanne Chiu at joanne.chiu@wsj.com and Anna Hirtenstein
at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
January 04, 2021 10:08 ET (15:08 GMT)
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