Wall Street Opens Mixed as Virus, Georgia Runoffs Weigh on Mood; Dow Down 40 Pts
By Geoffrey Smith
Investing.com -- U.S. stock markets opened the new year in mixed fashion, quickly reversing after making fresh record highs at the opening against a backdrop of political uncertainty and the likelihood of another holiday-driven surge in Covid-19 cases.
By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was down 40 points, or 0.1%, at 30,566 points. The S&P 500 was also down 0.1% and the Nasdaq Composite also edged down 0.1% after initially clinging on to its gains.
The market was unsettled by the prospect of the two runoff elections for Georgia's Senate seats, which could tip control of the upper chamber to the Democrats and usher in a more radical fiscal policy agenda from the new administration. President Donald Trump put pressure on Georgia's Secretary of State Brad Raffensberger to overturn the election result in his state at the weekend in an hour-long call that seemed engineered to undermine the Republican candidates in both races, by deterring Trump supporters from turning out.
The Republican Party needs to win only one of the two runoffs on Tuesday to keep control of the Senate for another two years – assuming that Senate Leader Mitch McConnell can keep unity among a party that seems increasingly divided over Trump’s attempts to cling to power.
Stocks have started the new year pricing in a rapid and vigorous recovery from the pandemic in 2021, but optimists are facing some headwinds from the near-term deterioration in the public health situation, which saw fresh records for hospital admissions due to Covid-19 over the holiday period. The spread of the disease is likely to have been accelerated by the broad refusal of Americans to change their plans for the holidays: the Transportation Security Administration registered more passengers on Sunday that on any day since the pandemic erupted last March. There's also a growing fear that the rollout of vaccinations won't be fast enough to stop the need for further lockdowns in the first and second quarters.
Among the early movers, Tesla (NASDAQ:TSLA) stock rose 4.6% after the company said it all-but met its target of 500,000 deliveries last year, a feat that bolstered the faith of investors in the company's ability to scale up rapidly. ADRs in Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI), two of its biggest competitors in China, also rose 7.1% and 6.8%, respectively, as investors latched on to the big rise in Tesla's Chinese sales.
At the other end of the spectrum, Quantumscape (NYSE:QS) stock fell over 35%, rewinding most of a massive runup around the holiday on speculation that Apple (NASDAQ:AAPL) may want its solid-state batteries for the electric vehicle project it's developing itself.
M&A activity also made itself felt in early trading: FLIR Systems (NASDAQ:FLIR) stock rose 20% after agreeing to be bought by Teledyne, while MGM Resorts (NYSE:MGM) stock fell 3.7% on fears that the company might end up paying too much for U.K.-based bookmaker Entain (OTC:GMVHY), whose technology powers its BetMGM operations. Entain on Monday said it had rejected an 11% stock-based bid that valued it at $11 billion and would have left its shareholders owning 41% of the enlarged MGM Resorts group.
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