Stocks off to volatile start in new year

Concern over surge in coronavirus cases leads to stock sell- off.

Sell- off comes amid concerns about the surge in the global coronavirus and politics.

Volatility gripped financial markets, spurring a stock selloff amid concern that a surge in global coronavirus cases could crimp the economic recovery. Traders also were jittery ahead of today’ s runoff elections in Georgia, which could 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. indexes down more than 2% earlier Monday, the S& P 500 closed down 1.5%— its worst decline since late October.

Global coronavirus infections topped 85 million, with Prime Minister Boris Johnson imposing a third lock down 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 nonstop political drama of 2020 i s 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.

“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. ,,, 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 t hat equities have priced in a Republican victory in at least one of the two contests today. 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 part y’s hands.”

MARK LENNIHAN/ AP FILE Monday was a tumultuous day at the New York Stock Exchange, although the market recovered a bit after a rocky start. The S& P 500 closed down 1.5%, its worst decline since late October, after dropping as much as 2.5% earlier in the day.