Stocks and index ETFs are plummeting on Monday, to commence the first trading day of 2021, after reaching new highs last year, in a tumulutuous but lucrative year for stock investors.
After hitting a record high at the open, the Dow Jones Industrial Average tumbled 620 points, or 2.05%, while the S&P 500 fell 1.9%, and the Nasdaq Composite shed 1.83%.
Major stock ETFs are also dropping precipitously on Monday as well. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are all broadly lower just after 1215PM EST.
Most of the market is bathed in red, with technology, aerospace, and real estate being hit especially hard so far. Real estate fell 2.2% to lead the S&P 500 lower, as the Vanguard Real Estate Index Fund ETF (VNQ) tumbled 2.88% Monday.
Monday’s decline arrived as traders expressed fear over the spiking number of coronavirus cases around the world, as well as a controversial phone recording that involved President Trump and the Georgia Secretary of State, as the state prepares for a Senate runoff election on Tuesday.
“With the Georgia runoff elections on Tuesday and the electoral college drama on Wednesday, expect two-way trading this week and a pickup in short term volatility,” wrote Marc Chaikin, CEO of Chaikin Analytics.
Data compiled by Johns Hopkins University revealed that over 20 million coronavirus infections have been confirmed in the U.S., including some from a more contagious new coronavirus strain. Across the world, over 85 million cases have been confirmed, as a multitude of countries, including the U.K., are tightening restrictions.
2020 an Overall Positive for the Markets
Despite the fall to start the year, the Dow finished 2020 by gaining 7.3%, while the S&P 500 added 16.3% in that time. The benchmark indexes made an incredible reversal, after being as much as 30% lower on the year at one point.
The top performer was the Nasdaq Composite. The index rocketed 43.6% for its biggest one-year gain since 2009.
Analysts are optimistic that these gains could continue into the new year, based on supportive monetary policy and successful coronavirus vaccines.
“The stock market is positioned for further gains in 2021 based on the twin pillars of coordinated fiscal and monetary policy from the U.S. Treasury and the Federal Reserve Board and a successful COVID vaccine rollout,” added Chaikin of Chaikin Analytics. “However, we envision some bumps in the road on the way.”
The U.S. rollout of multiple vaccines has not been without issues however.
Moncef Slaoui, the head of Operation Warp Speed, said on Sunday that the U.S. could heighten its vaccine rollout by offering a group of Americans half doses of the drug developed by Moderna. “We know that for the Moderna vaccine giving half the dose for people between the ages of 18 to 55 … induces identical immune response to the 100-microgram dose,” Slaoui said.
The news helped to boost Moderna by 4.3%, which is helping the Principal Healthcare Innovators Index ETF (BTEC) fare better than the broader market on Monday.
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