By Anna Hirtenstein and Alexander Osipovich
The Dow Jones Industrial Average and S&P 500 fell Monday
amid a sharp turn in technology stocks and a big week for corporate
The Dow was down 0.6% in midday trading, while the S&P
The Nasdaq Composite was up 0.2%. The tech-heavy index had
jumped as much as 1.4% shortly after the opening bell and then
turned negative before regaining some ground. The index ended last
week at record levels.
Investors are focused on a big week for corporate earnings,
expected to show which corporations are thriving and which are
struggling amid the Covid-19 pandemic.
More than one-fifth of the broad S&P 500 index and a third
of Dow components are scheduled to release earnings this week.
Starbucks, Verizon and Microsoft are slated for Tuesday. Other
major tech firms are reporting later in the week, including Apple,
Tesla and Facebook on Wednesday.
"The way that management will communicate their outlook will be
key for markets," said Sophie Chardon, a cross-asset strategist at
Lombard Odier. "Investors will have to weigh the possibility of
vaccinations with the reality of new lockdowns" and the impact on
Concerns about Covid-19 vaccine supplies also caused market
jitters. Pharmaceutical giant Merck scrapped its plans to develop a
Covid-19 vaccine after trials yielded disappointing results,
pulling a major player out of the coronavirus vaccine race. Its
shares were down 0.3% in recent trading.
Merck's announcement came after AstraZeneca warned on Friday
that its vaccine deliveries to the European Union would lag
Six of the S&P 500's 11 sectors slumped Monday, with
defensive sectors like utilities and consumer staples posting the
Technology and social-media stocks were volatile. Apple was up
2.4%, while data analytics firm Palantir Technologies was up 8.6%
ahead of a high-profile demo of its software planned for
Meanwhile, Twitter sank 1.3% and online marketplace Etsy
declined 1.1% after both stocks retreated from morning gains.
Energy stocks and financials were also among Monday's
underperformers. Chevron shares fell 1.7%, while Goldman Sachs
dropped 3.3%, weighing on the Dow.
The pandemic and months of stay-at-home orders have split the
economy into companies that benefit and those that suffer. The
biggest tech companies are largely seen as benefactors, as firms
and households increase their use of digital technology as they
The spread of new coronavirus variants has prompted retightened
lockdown measures around the world and more uncertainty around the
timeline of a return to normal, which may translate to another
boost in demand for tech.
Tech shares have also been a favorite of individual investors
who have poured into the stock market over the past year, fueling a
broad rally and driving wild moves in some stocks.
One of them, GameStop, surged 45% on Monday. The videogame
retailer has been at the center of a fight between bullish day
traders communicating on the internet forum Reddit, and short
sellers, who bet heavily against the stock. Hedge fund Melvin
Capital is among those that lost money from the trade.
In corporate news, shares of Kimberly Clark rose 5% after the
maker of Kleenex and Huggies said it expects net sales to rise in
2021, raised its quarterly dividend and unveiled a $5 billion share
Real-estate firm Tishman Speyer's special-purpose acquisition
company TS Innovation Acquisitions soared 51% after it said it
would merge with Latch, a smart lock maker, to take the company
Overseas, the pan-continental Stoxx Europe 600 fell 0.8%, which
analysts attributed to reports that the U.K. and France were
heading toward tighter lockdown measures.
In Asia, most major stock benchmarks rose. The Shanghai
Composite Index added 0.5% and Hong Kong's Hang Seng Index climbed
2.4%, buoyed by the rally in tech shares.
South Korea's Kospi Index advanced 2.2%. The index's heavyweight
Samsung Electronics rose 3% and chip maker SK Hynix rallied over
5%. Both are slated to report earnings this week.
China's most valuable internet company, Tencent Holdings, jumped
nearly 11% to a record high in Hong Kong trading. Tencent portfolio
company Kuaishou Technology, a TikTok-like video-recording app,
announced a coming initial public offering that may value it at
about $60 billion.
In bond markets, the yield on the benchmark 10-year U.S.
Treasury bond edged down to 1.043%, from 1.090% Friday.
Negotiations over President Joe Biden's plan for additional
fiscal stimulus will be an area of focus for investors. His
proposal for a $1.9 trillion spending package is likely to be a hot
topic of discussion among U.S. lawmakers this week.
Sebastian Mackay, a multiasset fund manager at Invesco, said a
package could be passed in the next couple of weeks. For markets,
"it's about the extent to which the [Federal Reserve] is still in
play, while the fiscal stimulus is coming through," he said.
Write to Anna Hirtenstein at firstname.lastname@example.org and
Alexander Osipovich at email@example.com
(END) Dow Jones Newswires
January 25, 2021 12:30 ET (17:30 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.