The 2021 stock market began to backfire after a brief rally with high rates at the start of Monday’s action, amid rising COVID-19 infections and changes in the virus raising concerns among investors about the prospects for global economic recovery.
Dow Jones industrial average DJIA,
it closed down 383 points, or 1.3%, for its worst start since 2016; while the S&P 500 SPX index,
and the Nasdaq Composite Index COMP,
down about 1.5% to start the new year.
check out: Dow, S&P 500 slips after hitting short in 2021
However, the sharp sell-off in the stock market should not be taken as an indication of Wall Street’s future after a stellar reversal in 2020, if history is any indication.
The Dow, for example, has recorded 18 incidents where the blue-chip benchmark has dropped by at least 1% on the first trading day of the year, and this has only continued seven overall reductions in January, or nearly 40% of that limited sample size. The index also finished down about 40% of the time for the calendar year, Dow Jones Market Data shows.
Dow Jones market data
For the S&P 500, meanwhile, of the 12 hours it has fallen by at least 1% to start in January, it has declined 42% of the time, or five times, for the rest of the year. month and calendar year.
Dow Jones market data
Meanwhile, the Nasdaq Composite has fallen 57% of the time, or four of the seven times it has opened a calendar year with a fall of 1% or more.
The slide for U.S. parity comes as hospitals in the U.S. jumped to a higher level than Sunday. At the same time, governments across Europe are extending locks, including the UK, where Prime Minister Boris Johnson has said he will suspend nationals until February to try to dismantle the embargo. reduce viral outgrowth.
Meanwhile, investors are worried about Georgia’s runoff races Tuesday, which will decide whether a Republican can retain control in the Senate. In the past few days, betting markets have shown a Republican lead decline, marking what looks like a tight race.
Democratic influence could boost equality by raising expectations for more aggressive fiscal stimulus measures this year, in addition to the billions of dollars already spent by Congress.
Strategists warn that it is important not to read too much into stock movements so early in a year, especially one that relies on an effective response to the worst pandemic in the world. us.
“The first day may not set a tone for the rest of the year, however,” wrote Lindsey Bell, chief investment strategy at Ally Invest.
“The best year of S&P 500 in history began recently – 1995 – with a slight decline on the first day. There is a 50/50 chance that the market will be up or down after the first day’s decline, ”she wrote.