Stock futures remained stable in Monday’s early morning trading after the S&P 500 suffered its first drop at the beginning of a year since 2016.
The Dow Jones Industrial Average futures fell 10 points. The S&P 500 futures remained stable and the Nasdaq 100 futures fell less than 0.1%.
Futures movements came after a strong Wall Street liquidation in early 2021. The S&P 500 fell 1.5%, registering its worst daily performance since October 27. Ten of the 11 S&P 500 sectors recorded losses, led by real estate.
The blue-chip Dow fell 382 points after dropping up to 700 points at its low of the day. Nasdaq Composite fell 1.4% as the FAANG block plummeted to start the new year.
The widespread liquidation of the market occurred before the second round of elections in Georgia on Tuesday, which will determine whether Republicans can retain control in the Senate. Meanwhile, the rise in Covid-19 cases worldwide and new blocking restrictions have continued to keep investors nervous.
“Investors are feeling impatient this week,” Lindsey Bell, chief investment strategist at Ally Invest, said in an email. “COVID cases continue to increase, with a new variant of the virus spreading across the globe. Tomorrow’s runoff runs in Georgia may decide the composition of the Senate, and the market generally performs better in a divided Congress.”
Many fear that rising tax rates and more progressive policies could become a reality if Democrats gain control of the Senate. However, such an outcome can create an opportunity for a larger and faster spending package, which will help support the market.
“Even if Democrats gain control, the margin will be remarkably small, and analysts are skeptical about the possibility of a significant change in tax or regulatory policy,” said Mark Hackett, head of investment research at Nationwide, in a note. “Democratic control could, however, trigger another round of stimulus for coronavirus and potentially an infrastructure package.”
On Monday, England imposed a third coronavirus blockade as the region struggles with a more communicable variant of Covid-19. New York State confirmed its first case of the new strain, Governor Andrew Cuomo said on Monday.
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