By Akane Otani and Anna Hirtenstein
U.S. stocks tumbled on the first trading day of the year,
retreating sharply from records set just days ago.
Investors are starting off the new year fixated on the same
issue that dominated markets for much of 2020: the coronavirus
pandemic. Many believe economic activity will pick up later this
year as more of the population is vaccinated and businesses are
able to reopen. But they acknowledge the path to recovery will
likely be long and uneven.
News on the pandemic front has painted a grim picture in recent
days. Hospitalizations in the U.S. jumped to a record Sunday.
Meanwhile, governments across Europe are extending lockdowns to try
to slow the spread of the virus.
The difficulties that countries face in containing the pandemic
mean many companies will remain vulnerable to financial pressures
in the near term.
The Dow Jones Industrial Average fell 382.59 points, or 1.3%, to
30223.89. The S&P 500 shed 55.42 points, or 1.5%, to 3700.65
and the Nasdaq Composite declined 189.83 points, or 1.5%, to
"We have continued concerns over Covid-19 and the ability to
staunch this wave, not just in the U.S. but globally," said Quincy
Krosby, chief market strategist at Prudential Financial.
Ms. Krosby added that there appeared to be growing nervousness
over Tuesday's Georgia runoff races, which will determine whether
Republicans are able to hold on to control in the Senate. In recent
days, betting markets have shown the Republican lead shrinking,
pointing to what will likely be a tight race.
"These are all of these concerns, and then we have a market that
is priced to perfection, which is denting returns right now," Ms.
Among individual stocks, Coca-Cola shares fell $2.07, or 3.8%,
to $52.77. RBC Capital Markets analysts downgraded the stock to
"sector perform" from "outperform," saying they believe the
pandemic will continue to limit major public events and dining at
restaurants, potentially hurting demand for Coca-Cola's
Airline stocks, another group that has been hard hit by the
pandemic, fell as well, with American Airlines falling 65 cents, or
4.1%, to $15.12 and Delta Air Lines losing $1.48, or 3.7%, to
Hotel operators also retreated, with Hilton Worldwide Holdings
shedding $3.74, or 3.4%, to $107.52 and Marriott International
losing $7.11, or 5.4%, to $124.81.
One stock that bucked the trend Monday: Tesla. The electric-car
maker rose $24.10, or 3.4%, to $729.77 after saying it delivered a
record 499,550 cars last year, just shy of its half a million
As investors broadly withdrew from stocks, gold prices jumped
2.7% to $1,944.70 a troy ounce, posting their biggest one-day
percentage gain since April. The precious metal tends to gain favor
with investors when market volatility increases.
Overseas, the pan-continental Stoxx Europe 600 rose 0.7%, paring
The U.K.'s FTSE 100 added 1.7%. 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
"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.
Most major stock benchmarks in the Asia-Pacific region advanced.
South Korea's Kospi Composite led gains, rising 2.5%.
China's Shanghai Composite rose 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% after Prime Minister Yoshihide
Suga said he might declare a state of emergency in Tokyo and
surrounding areas as new coronavirus infections continue to
Joanne Chiu contributed to this article
Write to Akane Otani at email@example.com and Anna Hirtenstein
(END) Dow Jones Newswires
January 04, 2021 16:50 ET (21:50 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
From Dec 2020 to Jan 2021
From Jan 2020 to Jan 2021