Investors sell as COVID -19 cases worsen

Stocks fall at start of year expected to bring strong global economy

U.S. stocks pulled back from their recent record highs Monday, as big swings return to Wall Street at the onset of a year where the dominant expectation is for a powerful economic rebound to sweep the world.

The S&P 500, which ended 2020 at an all-time high, slid 1.5 percent after earlier dropping as much as 2.5 percent. It was the benchmark index’s biggest decline since late October. Technology companies accounted for a big share of the sell-off, along with industrial, communication services, health care and other stocks.

Only the S&P 500’s energy sector managed to eked out a gain.

The selling comes as coronavirus cases keep climbing at frightening rates around the world, threatening to bring more lockdown orders that would punish the economy. The worsening numbers also raise the possibility that Wall Street has been overly optimistic about the big economic recovery it sees coming because of COVID-19 vaccines. Tuesday’s upcoming runoff elections to determine which party controls the Senate may also be contributing to the volatility.

“We’ve got a wobbly start to the year here,” said Lindsey Bell, chief investment strategist at Ally Invest. “Investors are looking for a reason to lock in profits. The selling is probably a bit overdone.”

The S&P 500 fell 55.42 points

to 3,700.65. The Dow Jones Industrial Average also fell from its record set last week, shedding 382.59 points, or 1.3 percent, to 30,223.89. At one point, it was down 724 points. The tech-heavy Nasdaq composite lost 189.84 points, or 1.5 percent, to 12,698.45.

Small company stocks, which have been notching gains, also fell. The Russell 2000 index of smaller companies dropped 28.94 points, or 1.5 percent, to 1,945.91. Treasury yields held relatively steady after giving up a healthy gain in the morning. Gold jumped 2.7percent, while the price of U.S. crude oil fell 1.9 percent.

Stocks also fell in Japan as officials there mull a state of emergency due to surging virus cases. But optimism was more prevalent in other markets, with European and most Asian indexes closing higher.

The United Kingdom has been hit particularly hard by a new variant of the coronavirus that appears to be more contagious. On Monday, the United Kingdom became the first nation to start using the COVID-19 vaccine developed by Oxford University and drugmaker Astrazeneca.

In the United States, regulators have already approved two other vaccines. China last week gave the green light for its first domestically developed vaccine. Others are also being tested.