Stocks on Wall Street sink in their steepest decline since October.

Wall Street began the year with a tumble on Monday, with the S&P 500 suffering its steepest decline in more than two months as it retreated from record territory.

Analysts traced the sell-off to a number of factors, including political jitters stemming from Tuesday’s runoff election in Georgia — which will determine control of the U.S. Senate — concerns about a resurgent coronavirus, and the simple need for investors to take a breather after a stretch of sizzling gains.

It wasn’t clear that the slump would continue into Tuesday. Stocks in Asian markets were steady early on Tuesday, while futures markets suggested that Wall Street would stabilize when it opens.

The index fell 1.5 percent, its sharpest drop since late October. Stocks that have been most sensitive to investor sentiment about the coronavirus pandemic led the decline. Shares of Royal Caribbean Cruises, Wynn Resorts, Marriott International and Carnival were all down by 5 percent or more.

Major benchmarks in Europe also gave up most of their early gains on Monday, though they managed to stay in positive territory for the day. The Stoxx Europe 600 index rose 0.7 percent, and the FTSE 100 index in Britain gained 1.7 percent.

After Europe’s markets closed on Monday, Prime Minister Boris Johnson imposed a strict new national lockdown as a more contagious variant of the coronavirus threatened to overwhelm the nation’s beleaguered hospitals.

The variant is now present in the United States, where coronavirus cases and deaths have reached records in recent days.

Monday’s retreat also came after the S&P 500 rallied more than 16 percent in 2020, defying the economic crisis and the human catastrophe of the pandemic, as the Federal Reserve stepped in to support financial markets, Congress spent trillions on unemployment and business support programs, and vaccinations began, showing a sustainable way out of the pandemic.

But investors have always had to contend with the still-spreading coronavirus pandemic, the risk of new lockdowns and political turmoil in the United States.

On Tuesday, two runoff Senate elections in Georgia will settle control of the upper house of Congress, and finally determine how hard it will be for President-elect Joseph R. Biden Jr. to move forward on his agenda.

In the wake of the presidential election in November, investors had begun to anticipate that Republicans would retain control of the Senate, giving them the ability to limit the Biden administration’s ability to raise taxes or increase regulation.

That view had also helped lift stocks at the end of last year, but Monday’s trading showed investors had grown less confident in a Republican win on Tuesday.

“The market fears the Democrats taking both of those seats,” said Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG. He said that investors have been closely watching prediction markets give greater chances to that outcome in recent days. “It’s basically now a tossup as to what the outcome is going to be tomorrow, after the Republicans being heavily favored.”

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