Wall Street started the first trading day of 2021 with the Dow and S&P 500 setting another round of record highs as traders prepare for a busy week of politics and earnings — and more in Monday’s stock market recap.
However, the opening gains quickly evaporated as the uncertainty of this week’s events and the outcome of two key Senate races in Georgia weighed on sentiment.
A win for democratic candidates would allow President-elect Joe Biden more freedom in pursuing his own legislation over the next two years, while a loss could give Republicans a chance to block many of his political appointments.
The S&P 500 sank 1.5% after testing a midday low of 3,662.
The Nasdaq also stumbled 1.5% following the intraday fade to 12,543.
The Russell 2000 was down for the fifth time in six sessions after giving back 1.5% while testing an afternoon low of 1,927.
The Dow dropped 1.3% with the first-half low tapping 29,881.
Real Estate was the weakest sector after tumbling 3.2%, followed by Utilities and Industrials, which lost 2.5% and 2.4%, respectively. Energy was the only sector that showed strength after nudging up 0.2%.
Shares of Tesla Inc. (Nasdaq: TSLA) added 3% while testing another record peak after the company reported delivery of 180,570 electric vehicles in the fourth quarter, producing 179,757 vehicles overall.
Tesla also said it delivered 499,550 units in 2020 versus its recent guidance of 500,000 vehicles, producing 509,737 total.
The start of the fourth-quarter earnings season gets underway this week with a heavy slate of companies reporting Thursday, representing the bulk of the action.
Cal-Maine Foods Inc. (Nasdaq: CALM) and Smart Global Holdings Inc. (Nasdaq: SGH) highlight Tuesday’ action. Greenbrier Companies (NYSE: GBX), RPM International Inc. (NYSE: RPM), Simply Good Foods Company (Nasdaq: SMPL) and Saratoga Investment Corp. (NYSE: SAR) announce numbers Wednesday.
There are nearly 20 major companies reporting earnings Thursday including Acuity Brands Inc. (NYSE: AYI), Bed Bath & Beyond Inc. (Nasdaq: BBBY), Conagra Brands Inc. (NYSE: CAG), Constellation Brands Inc. (NYSE: STZ), Micron Technology Inc. (Nasdaq: MU), PriceSmart Inc. (Nasdaq: PSMT), Walgreens Boots Alliance Inc. (Nasdaq: WBA) and WD-40 Co. (Nasdaq: WDFC).
There are no major announcements Friday.
European markets settled higher despite new worries over the rapid increase in coronavirus cases and the impending possibility of a new national lockdown.
The UK’s FTSE 100 rallied 1.7% and the Belgium20 soared 1.2%. The Stoxx 600 and France’s CAC 40 rose 0.7% while Germany’s DAX 30 edged up 0.1%.
Asian markets closed mostly in the black.
South Korea’s Kospi surged 2.5% and Australia’s S&P/ASX 200 rallied 1.5%. China’s Shanghai and Hong Kong’s Hang Seng jumped 0.9%. Japan’s Nikkei fell 0.7%
Markit Manufacturing index was bumped up to 57.1 in the final December print, versus the 56.5 in the preliminary print and the 56.7 reading in November. The employment component improved to 52.2 from 51.7 in November and represented the fifth straight month in expansion.
Construction Spending rose 0.9% in November after rising 1.6% in October. Spending on nonresidential projects was weak, sliding -0.6% versus October’s 0.4% gain. Private construction spending fell to 1.2% from 1.6% previously. Public construction spending declined -0.2% after rebounding 1.6% previously.
Chicago Federal Reserve President Charles Evans repeated the bank’s stance will be accommodative for a long time and quantitative easing asset purchases are likely to remain intact. He did note the vaccine progress has been positive, and it appears the health crisis will be brought under control as analysts move through the year.
Nevertheless, Evans expects a simulative posture to remain in place. He remains supportive of the new policy framework that looks to overshoot the 2% inflation target with momentum and delivering rates around 2.5% that would be important for the Fed in achieving its inflation objective.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down for the first time in three sessions despite tagging an intraday peak of $158.18. Lower resistance at $158-$158.50 and the 50-day moving average were breached but held. A move above the latter would signal additional strength towards $159.50-$160.
Support remains at $157-$156.50 followed by $156-$155.50 with Monday’s low hitting $156.54.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a two-session losing streak after zooming to a midday high of 29.19. Prior and lower resistance at 29-29.50 was cleared but held. A close above 30 and the 200-day moving average would indicate further upside towards 31.50-32 and prior levels from a few weeks ago.
Fresh support is at 26.50-26 followed by 25.50-25 and the 50-day moving average.
The SPDR S&P 500 ETF (NYSE: SPY) fell for the first time in three sessions despite tapping an opening all-time high of $375.45. Fresh and lower resistance at $375-$375.50 was cleared but held.
The intraday fade to $364.82 tripped but held prior and upper support at $365-$364.50. A close below the latter would suggest further weakness towards $363-$362.50.
RSI is back in a downtrend with upper support at 55-50 holding. A close below the latter would signal a retest towards 45-40 and levels from late October. Resistance is at 60.
The Utilities Select SPDR Fund (NYSE: XLU) had its two-session winning streak snapped following the second-half pullback to $60.77. Near-term and upper support at $61-$60.50 was breached but held. A drop below the latter and the December low at $60.32 would indicate further weakness towards $60-$59.50
Resistance is at $62.50-$63 and the 50-day moving average.
RSI is back in a downtrend with key support at 40 holding. A close below this level would suggest additional weakness towards 35-30 and levels from March. Resistance is at 45-50.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.