Stocks Slump on Virus Spike Before Georgia Runoff: Markets Wrap
Pedestrians pass in front of the Nasdaq MarketSite in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Stocks Slump on Virus Spike Before Georgia Runoff: Markets Wrap

Volatility gripped financial markets, spurring a stock selloff amid concern that a surge in global coronavirus cases could crimp the nascent economic recovery. Traders were also jittery ahead of Tuesday’s runoff elections in Georgia, which will determine whether Democrats have control of Congress to push President-elect Joe Biden’s agenda.

While equities pared a slide that drove major U.S. benchmarks down more than 2% earlier Monday, the S&P 500 suffered its worst decline to start a year since 2016. It was also the biggest drop for the benchmark gauge in almost 10 weeks. Giants Apple Inc. and Inc. sank at least 2.1%, Boeing Co. weighed on the Dow Jones Industrial Average following an analyst downgrade, and Tesla Inc. climbed after coming close to meeting its vehicle-deliveries goal. The Cboe Volatility Index -- a gauge of expected price swings for the S&P 500 known as the VIX -- surged the most since October.

Global coronavirus infections topped 85 million, with Prime Minister Boris Johnson imposing a third lockdown across England and Japan considering another state of emergency for the Tokyo area. Daily cases in the U.S. soared to a record of nearly 300,000 following the New Year holiday, and an easier-to-spread variant detected for the first time last week could intensify the surge. Meanwhile, the political drama of 2020 is also bleeding into the first week of 2021 -- with a pivotal election in Georgia, promises of protests in the streets and President Donald Trump’s dragged-out fight over the November vote threatening to tear apart the Republican Party.

Stocks Slump on Virus Spike Before Georgia Runoff: Markets Wrap

“Equity markets will remain sensitive to developments tied to the pandemic that have held the U.S. and global economy hostage for nearly a year,” John Stoltzfus, chief investment strategist at Oppenheimer, wrote in a note. “A nearer hurdle for the markets to consider will be the outcome of the runoff elections for two seats in the U.S. Senate taking place in Georgia. Should the Democrats win both seats, we expect the S&P 500 to become vulnerable to a downdraft in the neighborhood of 6% to 10%” from the end of 2020.

For Stoltzfus, it appears that equities have priced in a Republican victory in at least one of the two contests. He added that “markets prefer that Washington’s Capitol Hill have enough checks and balances in place to keep political power out of just one party’s hands.”

Elsewhere, traders see U.S. inflation averaging at least 2% per year over the coming decade -- the first time expectations have climbed that high since 2018. Bitcoin’s rally fizzled out as the famously volatile cryptocurrency sank as much as 17%. Oil dropped as OPEC+ talks were unexpectedly suspended after a majority of members, including Saudi Arabia, opposed Russia’s proposal for a February supply hike.

What to watch this week:

  • On Tuesday, the state of Georgia holds a run-off election for two U.S. Senate seats that will decide control of the chamber.
  • U.S. Congress meets to count electoral votes and declare the winner of the 2020 Presidential election Wednesday.
  • FOMC minutes out Wednesday.
  • U.S. unemployment report for December is due Friday.

These are some of the main moves in markets:


  • The S&P 500 decreased 1.5% at 4 p.m. New York time.
  • The Stoxx Europe 600 Index climbed 0.7%.
  • The MSCI Asia Pacific Index advanced 0.6%.


  • The Bloomberg Dollar Spot Index was little changed.
  • The euro increased 0.3% to $1.2248.
  • The Japanese yen was little changed at 103.15 per dollar.


  • The yield on 10-year Treasuries rose less than one basis point to 0.91%.
  • Germany’s 10-year yield declined four basis points to -0.60%.
  • Britain’s 10-year yield decreased two basis points to 0.173%.


  • The Bloomberg Commodity Index advanced 0.7%.
  • West Texas Intermediate crude fell 2.4% to $47.34 a barrel.
  • Gold climbed 2.3% to $1,942.82 an ounce.

©2021 Bloomberg L.P.

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