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The US market remained choppy on the first trading day of 2021 as the rising COVID-19 and the Georgia state Senate runoff elections have kept Wall Street on the edge.
The year 2021 didn’t start on a good note for Wall Street investors as the US markets remained under pressure. On the first trading day, on Monday, January 4, the Dow Jones Industrial Average (INDEXDJX: .DJI) tanked 300 points closing at 30,223.89.
Although the Dow index slipped below 30K levels during the trading hours, it gained 300 points in the evening session of the first trading day. Monday’s correction comes amid concerns of rising COVID-19 cases as well as the Georgia run-off elections. Other indices like the S&P 500 (INDEXSP: .INX) and the Nasdaq Composite (INDEXNASDAQ: .IXIC) faced similar pressure.
Both the indices slipped 1.5% in the biggest one-day-sell-off since October 28, 2020. Billionaire investor Carl Icahn expects a painful correction ahead. Speaking to CNBC’s Scott Wapner, Icahn said:
“In my day I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction.”
The markets remained under pressure as the rising COVID-19 cases cast a shadow on the global economic recovery. The new COVID-19 strain in the U.K. has kept the market on the edge. Prime Minister Boris Jhonson has announced a national lockdown to curb the spread.
“I completely understand the inconvenience and distress this change will cause millions of people and parents up and down the country,” Johnson said. “The problem isn’t that schools are unsafe for children … the problem is that schools may act as vectors of transmission, causing the virus to spread between households.”
News That Influenced the Dow on the First Trading Day of 2021
Markets remained choppy on Monday as the Georgia State prepares for a Senate runoff election. This could possibly be beneficial for the Democrats to get a majority in the chamber. Jason Pride, CIO of private wealth at Glenmede told CNBC:
“If the GOP wins just one seat, they will likely stonewall some of Biden’s more ambitious proposals, but a Democratic sweep of both elections might give the incoming administration free rein on their policy agenda”.
A win for the Democrats would mean they get control of both – the Senate and the House. However, despite a low start to 2021, market analysts are betting on further rallies in 2021. Marc Chaikin, CEO of Chaikin Analytics said:
“The stock market is positioned for further gains in 2021 based on the twin pillars of coordinated fiscal and monetary policy from the US Treasury and the Federal Reserve Board and a successful COVID vaccine rollout. However, we envision some bumps in the road on the way.”
The market news can be found here.