The main U.S. stock benchmarks on Tuesday were pointing lower after equities registered their first losses to open a new year since 2016 on Monday, on the back of growing concerns about a spike in the spread of COVID-19 due to a more transmissible variant of the pathogen that has led to stiffer lockdowns in parts of the world.
Investors also are watching a key political race in Georgia that could determine which party controls the U.S. Senate.
How are stock benchmarks performing?
On Monday, stocks fell to start trade in 2021, with the Dow and S&P 500 booking their sharpest daily drop in almost 10 weeks and the equity markets registering their first loss to start a year since 2016:
What’s driving the market?
Stocks futures were indicated slightly lower on Tuesday, as investors find few reasons to drive prices much higher ahead a of key election in Georgia that could determine control of the Senate and possibly influence the near-term outlook for Wall Street buying.
Democratic challengers Jon Ossoff and Raphael Warnock face off against Republican Sens. David Perdue and Kelly Loeffler, and the results may not be known for several days.
Ahead of Georgia’s two U.S. Senate runoff elections on Tuesday that will determine the balance of power in Washington, betting markets and polls are signaling some confidence in the Democratic Party’s prospects, which could result in some repeal of corporate tax reductions and other measures that could weigh on stocks, market strategists say.
That said, Democratic control in the Senate may also result in further coronavirus relief measures from Washington, with President-elect Joe Biden due to be sworn in as the 46th Democratic president of the U.S. on Jan. 20.
Republicans currently have a 51-48 majority in the Senate. If Democrats win both Georgia races, the party will gain control because Vice President-elect Kamala Harris would cast tiebreaking votes. If Republicans win one of them, the GOP will maintain its majority.
“As we stated yesterday, the chances of the Democrat’s taking control of the Senate in a tied majority scenario have risen,” wrote Peter Cardillo, chief market strategist at Spartan Capital Securities. “However, while we expect the GOP to maintain control by slim margin the political uncertainties will likely keep the market defensive,” he wrote.
That vote comes as the U.S. counted at least 196,386 new cases on Monday, and at least 2,047 people died, according to a New York Times tracker. Meanwhile, A highly contagious strain of COVID-19 recently discovered in the U.K. has also been found in New York, the state’s governor said Monday, a day after London announced a new, stricter lockdown in the country.
What the News Means for You and Your Money
Meanwhile, in a separate development that might have implications for China-U.S. relations, the New York Stock Exchange reversed its decision to delist a trio of Chinese stocks: China Mobile Ltd., China Telecom Corp. and China Unicom Ltd. The NYSE’s delisting plans, which had been set to take effect next week, followed an order that had been signed by President Donald Trump in November.
Looking ahead, investors are awaiting a report on manufacturing from the Institute for Supply Management at 10 a.m. Eastern, with data on motor vehicle sales coming throughout the day.
Cleveland Federal Reserve President Loretta Mester will speak to reporters at 9:30 a.m. Eastern, and Fed President John Williams, chair of an American Economics Association, will discuss ultralow interest rates at 3:45 p.m., along with Chicago Fed President Charles Evans.