(For a live Reuters blog on the US, UK and European stock markets, click LIVE / or type LIVE / in a news window)
* J&J falls after COVID-19 vaccine trial data
* GameStop increases as brokers ease restrictions
* Honeywell declines after gains (updates to the market close)
NEW YORK, Jan. 29 (Reuters) – U.S. stock indexes fell, closing Friday’s session with the biggest weekly drop since October, with investors assessing the ramifications of Johnson’s COVID-19 vaccine trial results & Johnson, while an impasse between Wall Street hedge funds and retail investors contributed to the volatility.
Johnson & Johnson dropped as one of the biggest weights in both the Dow and S & P500 after the drugmaker said its single dose vaccine was 72% effective in preventing COVID-19 in the United States, with a lower rate of 66% observed globally.
The results compare to the high limit established by two vaccines authorized by Pfizer Inc / BioNTech SE and Moderna Inc, which were about 95% effective in preventing symptomatic diseases in main trials when administered in two doses. Moderna’s shares rose, while Pfizer’s shares changed little.
Concerns about a short squeeze that started earlier in the week resurfaced after an army of retail investors resumed trading in stocks like GameStop Corp and Koss Corp, which soared after brokers like Robinhood eased some of the restrictions they placed on trading.
“The big picture is that if there is any bad news that suggests or indicates that there could be a longer hibernation period for us to be indoors and not consume or spend, it tends to slow down the market and many people stand aside, particularly with that news, ”said Sylvia Jablonski, director of investments for Defiance ETFs in New York.
“And so what’s going on with (Gamestop) and all that stuff, people are a little bit afraid to trade.”
The increase in volatility has led to a huge increase in volume, totaling more than 20 billion shares in each of the last two sessions on the US exchanges for the most active trading days ever recorded, since 2014, according to Refinitiv data.
The United States Securities and Exchange Commission said it is closely monitoring any potential offenses, both for brokerage firms and for social media traders.
Unofficially, the Dow Jones Industrial Average fell 629.89 points, or 2.06%, to 29,973.47, the S&P 500 lost 74.61 points, or 1.97%, to 3,712.77 and the Nasdaq Composite fell 273, 58 points, or 2.05%, to 13,063.58.
All three major indices suffered the biggest weekly drop since the end of October.
Market participants speculated that the volatility caused by small pressures has put investors’ favorites, including Apple Inc, under pressure, as hedge funds sell to cover billions of dollars in losses.
Apple’s shares fell, while Microsoft also fell.
Still, while concerns about the increase in COVID-19 cases and rugged vaccine launches kept investors suspicious about a retraction and an increase in short-term volatility, the start of quarterly earnings alleviated some concerns about stretched stock valuations .
Of the 184 companies in the S&P 500 that reported earnings through Friday morning, 84.2% exceeded analysts’ expectations, well above the 75.5% rate in the last four quarters, according to data from Refinitiv.
Honeywell International fell after recording a 13% drop in quarterly earnings.
The first known case of the South African variant COVID-19 in the United States, partially resistant to current vaccines and antibody treatments, was detected in South Carolina on Thursday.
The data showed that US labor costs rose more than expected in the fourth quarter amid a jump in wages, supporting views that inflation may accelerate this year, while another report showed that US consumer spending fell by second consecutive month in December.
Reporting by Chuck Mikolajczak; edition by Diane Craft