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 earnings.

The Dow was down 0.6% in midday trading, while the S&P dropped 0.2%.

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 each company.

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 projections.

Six of the S&P 500's 11 sectors slumped Monday, with defensive sectors like utilities and consumer staples posting the biggest gains.

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 Tuesday.

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 operate remotely.

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 buyback program.

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 public.

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 and Alexander Osipovich at


(END) Dow Jones Newswires

January 25, 2021 12:30 ET (17:30 GMT)

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