Stock market news live updates: Stocks sink in first session of 2021

Stocks fell Monday in the first session of 2021, as concerns over a post-holiday spike in virus cases compounded with uncertainty over the outcome of the Georgia Senate runoff elections.

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All three major indices dropped more than 1% by market close on Monday, and the Dow fell 1.25% for its worst start to a year since 2016. Earlier in the session, both the S&P 500 and Dow had ticked up to record intraday levels before quickly paring gains. Bitcoin prices (BTC-USD) also extended their recent rally over the weekend, breaking above $34,000 to set a new all-time high before steadying at more than $31,000.

New COVID-19 cases in the U.S. hit a one-day record of nearly 300,000 over the weekend, according to data from Bloomberg and Johns Hopkins University, following an increase in travel for the holidays and a resumption of testing after a holiday pause.

“The widely anticipated post-holiday spike in cases is underway, and the seven-day average likely will hit a new record later this week,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note Monday. “We’re braced for a bigger rebound than was seen in early December, before cases finally peak around the middle of the month.”

Traders have also been eyeing developments around the Georgia Senate runoff elections, which will determine control of the Senate and the balance of power in Congress. Republicans currently maintain an only narrow majority in the chamber, or 50 seats to Democrats’ 48 seats when excluding Georgia.

With strategists having largely assumed a divided government outcome for 2021, a Democratic sweep after Tuesday’s elections could spark a 10% selloff in the S&P 500, Oppenheimer strategist John Stoltzfus said Monday. Polling data from FiveThirtyEight showed both Democratic candidates with narrow leads as of Monday morning. However, Republicans have historically typically won the Senate seats in the state.

Traders are heading into the new year with a vaccine roll-out under way and more stimulus recently passed, offering hopes of a stronger recovery once inoculations allow the restrictions that have swept the country for months to ease. Still, hurdles exist to the outlook, and one of the biggest deciding factors in economic growth and rebound in profitability for many corporations will be the success of vaccine distribution as COVID-19 cases continue to spike, many strategists have said.

“The big question for the global economy over the year ahead will be how quickly populations are vaccinated, particularly among vulnerable groups like the elderly and those with underlying health conditions who make up the majority of hospitalizations,” Deutsche Bank economists including Henry Allen wrote in a note. “If the most affected groups can be vaccinated quickly, that could pave the way for a gradual easing of restrictions and a return to something closer to normality.”

“Markets are likely to be closely watching any issues with COVID-19 or the vaccine rollout, not least given the new variants that have been found in the UK and South Africa which spread more rapidly and have been found in increasing numbers of countries,” they added.

As of Monday morning, the first doses of a COVID-19 vaccine had been given to more than 4.5 million people in the U.S., comprising over 1% of the nation’s population. However, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said President-elect Joe Biden’s goal of ramping up distribution to vaccinate 100 million people in his first 100 days was a “realistic goal,” according to an interview with ABC on Sunday.
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