(Reuters) – U.S. stock indexes fell on Friday after data from the Johnson & Johnson COVID-19 vaccine dampened sentiment, while weighing down an impasse between Wall Street hedge funds and small retail investors.
Johnson & Johnson fell 3.9% after the drugmaker said its single-dose vaccine was 72% effective in preventing COVID-19 in the United States, with a lowest rate of 66% seen 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.
“Although it is good to have another participant, the question is effectiveness. The concern is if it is much less effective, investor and consumer confidence will be substantially less, ”said Sam Stovall, chief investment strategist at CFRA Research.
Moderna jumped 8.1%, helping Nasdaq’s Biotechnology index to rise 1.4%.
Concerns about a little pressure increased after an army of retail investors resumed trading in GameStop Corp and Koss Corp. The stock soared after brokers, including Robinhood, eased some of the restrictions they placed on trading.
The U.S. Securities and Exchange Commission alerted both brokers and social media traders that it was closely monitoring possible irregularities.
Investor favorites, including Apple Inc, were recently sold by hedge funds to cover billions of dollars in losses.
Shares of Apple, Amazon.com Inc, Microsoft Corp, Facebook Inc, Netflix Inc, Tesla Inc and Alphabet Inc fell between 0.8% and 3.2%.
“I think a lot of investors were discounting the effects of retail to some extent, so they were taken by surprise,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, California.
“The fact that it has created shifts for many large hedge funds has definitely caused at least some degree of additional market correction.”
Concerns about tight assessments, new variants of the coronavirus and rising cases have kept investors nervous about a retraction and an increase in short-term volatility.
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.
At 12 pm ET, the Dow Jones Industrial Average fell 404.60 points, or 1.32%, at 30,198.76, the S&P 500 fell 47.75 points, or 1.26%, at 3,739.63, and the Nasdaq Composite fell 139.68 points, or 1.05%, to 13,197.48.
All three major indices recorded their biggest weekly drop since the end of October.
The data showed that US labor costs rose more than expected in the fourth quarter amid a jump in wages, supporting the view that inflation may accelerate this year.
Honeywell International Inc fell 2.5% after recording a 13% drop in quarterly earnings.
The emissions decline surpassed the advanced ones by a 1.98 to 1 ratio on the NYSE and a 1.28 to 1 ratio on the Nasdaq.
The S&P index recorded six new 52-week highs and no new lows, while the Nasdaq recorded 53 new highs and 11 new lows.
Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Shounak Dasgupta edition