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Wall St. drops after J&J vaccine data, GameStop effect weighs

Stock MarketsJan 29, 2021 07:40PM ET
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© Reuters. FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the NYSE in New York

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stock indexes dropped, closing out the Friday session with the biggest weekly fall since October, as investors gauged the ramifications of Johnson & Johnson (NYSE:JNJ)'s COVID-19 vaccine trial results, while a standoff between Wall Street hedge funds and small, retail investors added to volatility.

Johnson & Johnson fell 3.56% as one of the biggest weights on both the Dow and S&P500 after the drugmaker said its single-dose vaccine was 72% effective in preventing COVID-19 in the United States, with a lower rate of 66% observed globally.

The results compare to the high bar set by two authorized vaccines from Pfizer (NYSE:PFE) Inc/BioNTech SE and Moderna (NASDAQ:MRNA) Inc, which were around 95% effective in preventing symptomatic illness in key trials when given in two doses. Moderna shares climbed 8.53% while Pfizer shares edged up 0.11%.

Worries of a short squeeze that began earlier in the week resurfaced after an army of retail investors returned to trade shares in stocks such as GameStop Corp (NYSE:GME) and Koss Corp, which shot higher after brokers including Robinhood eased some of the restrictions they had placed on trading.

"The overall picture is that if there is any bad news that suggests or indicates there could be a longer hibernation period for us to be indoors and not consuming or spending that tends to set the market back and a lot of people sit on the sidelines, particularly with that news," said Sylvia Jablonski, chief investment officer at Defiance ETFs in New York.

"And then what is going on with (Gamestop) and all that stuff, people are a little afraid to trade."

The surge in volatility has led to a huge increase in volume, totaling over 20 billion shares in each of the past two sessions across U.S. exchanges for the most active trading days on record going back to 2014, according to Refinitiv data.

Volume across U.S. exchanges on Friday was 17.13 billion shares, compared with the 15.26 billion average for the full session over the last 20 trading days.

The U.S. Securities and Exchange Commission said it was closely monitoring any potential wrongdoing, to both brokerages and social media traders.

The Dow Jones Industrial Average fell 620.74 points, or 2.03%, to 29,982.62, the S&P 500 lost 73.14 points, or 1.93%, to 3,714.24 and the Nasdaq Composite dropped 266.46 points, or 2%, to 13,070.70.

All three main indexes suffered their biggest weekly fall since the end of October, as the Dow lost 3.28%, the S&P fell 3.31% and the Nasdaq declined 3.49%. For the month, the Dow dipped 2.04%, the S&P shed 1.12% and the Nasdaq gained 1.42%.

Both the S&P and Dow closed below their 50-day moving average, seen as a technical support level.

Market participants have speculated that volatility caused by the short squeezes have led to investor favorites including Apple Inc coming under pressure as hedge funds sell to cover billions of dollars in losses.

Apple shares (NASDAQ:AAPL) declined 3.74% while Microsoft (NASDAQ:MSFT) fell 2.92%.

Still, while concerns about rising COVID-19 cases and bumpy vaccine rollouts kept investors leery about a pullback and an increase in volatility in the near-term, the start to quarterly earnings has eased some concern about stretched stock valuations.

Of the 184 companies in the S&P 500 that have reported earnings through Friday morning, 84.2% have topped analyst expectations, well above the 75.5% beat rate for the past four quarters, according to Refinitiv data.

Honeywell International (NYSE:HON) lost 3.68% after it posted a 13% fall in quarterly profit.

The first known U.S. cases of the South African COVID-19 variant, found to be partly resistant to current vaccines and antibody treatments, was detected in South Carolina on Thursday.

Data showed U.S. labor costs rose more than expected in the fourth quarter amid a jump in wages, supporting views that inflation could accelerate this year, while another report showed U.S. consumer spending fell for a second straight month in December.

Declining issues outnumbered advancing ones on the NYSE by a 2.88-to-1 ratio; on Nasdaq, a 2.38-to-1 ratio favored decliners.

The S&P 500 posted 7 new 52-week highs and no new lows; the Nasdaq Composite recorded 64 new highs and 16 new lows.

Wall St. drops after J&J vaccine data, GameStop effect weighs
 

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Comments (36)
Relax Be Happy
Relax Be Happy Jan 31, 2021 9:51AM ET
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Retail investors have the right to buy and sell any stock. Hedge funds and mutual funds buy massively stocks all the time.
Tim Willis
Tim Willis Jan 30, 2021 9:47AM ET
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#DOGE TO €0,04 please🙏🏼
Semih Unalan
Semih Unalan Jan 30, 2021 5:08AM ET
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Market manipulation by Reddit traders cannot go unpunished. This is a classic cornering the market scheme disguised as political activism. Laws apply to everyone. SEC should do its job and prosecute those acting with criminal intent.
Sean Livingstone
Sean Livingstone Jan 30, 2021 5:08AM ET
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If you want to punish reddit traders, shouldn't someone at SEC lose their jobs for allowing more stocks than there actually are to be borrowed for shorting. How can you buy or sell more than there actually are?
Semih Unalan
Semih Unalan Jan 30, 2021 5:08AM ET
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Sean Livingstone two wrongs don't make a right.
Art Fire
Art Fire Jan 30, 2021 3:49AM ET
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Everything is still at record levels... this is a healthy 10% correction. It was expected by most non trump/biden extremists who dont have to blame politicians for their failures to be grown ups.
Red Riley
Red Riley Jan 29, 2021 11:50PM ET
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guessing it is current administration causing the decline
Art Fire
Art Fire Jan 29, 2021 11:50PM ET
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Lol
Kevin Geraldy
Kevin Geraldy Jan 29, 2021 11:20PM ET
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Apes together strong
Nikhil Kalkundri
Nikhil Kalkundri Jan 29, 2021 11:20PM ET
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ha ha ha
Hanno COETZER
Hanno COETZER Jan 29, 2021 7:54PM ET
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The little guy has more power which they lead us to believe
Whaling Trawler
Whaling Trawler Jan 29, 2021 6:42PM ET
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I use my body's immune system. 100% safe and effective.
Bernard Tan
Bernard Tan Jan 29, 2021 6:42PM ET
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Hello Trump! 🤣
Raymond Huggard
Raymond Huggard Jan 29, 2021 6:42PM ET
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Famous last words
Ryan Dailey
Ryan Dailey Jan 29, 2021 6:39PM ET
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Not even a mention of Novavax?
New Jazenevd
New Jazenevd Jan 29, 2021 6:07PM ET
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“GameStop” is a little blip, inflated by media and politicians, to distract attention from actual, sizable market drop.
Omar Huddleston
Omar Huddleston Jan 29, 2021 4:07PM ET
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The people captured the wolves on wall street, sold their fur, and left the hedge hounds naked! Enough said!
znao sam
znao sam Jan 29, 2021 3:25PM ET
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nope, they are dawn because of game stop......Hedge founds pulling money out because they are broke.....We are sick from this game ,fake new high, fake new low, fake corona virus ,fake earnings data,fake MEDIA......All is revealed, manipulated and scam .....#### ###
Jeff Chevalier
Jeff Chevalier Jan 29, 2021 3:25PM ET
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You think every hedge fund shorted Gamestop? Get real. It's not even on the radar of most funds.
Nikhil Kalkundri
Nikhil Kalkundri Jan 29, 2021 3:25PM ET
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fake new world ha ha ha
Zhikang Sim
Zhikang Sim Jan 29, 2021 2:02PM ET
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so the Gamestop drag dow jones fall down?
Scott Bailey
Scott Bailey Jan 29, 2021 2:02PM ET
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They, liberals, will continue to blame everyone but themselves...im sure its Trumps fault...so much for the Biden Bounce!!!!
Bobster Bambino
Bobster Bambino Jan 29, 2021 1:21PM ET
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With the vix going ip market more prone tonlarge gains/losses. No surprise here
Vlad Lozovskiy
Vlad Lozovskiy Jan 29, 2021 1:21PM ET
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SO this is how the call corruption now?  "Gamestop" Lol lol lol
Sun Moon
Sun Moon Jan 29, 2021 1:17PM ET
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Hahaha, what - EXACTLY - is the "GameStop effect"? Is it: "a growing standoff between hedge funds and retail investors."? What a line of bull.
Zach Lohman
Zach Lohman Jan 29, 2021 1:17PM ET
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Really, GME caused a sell off? The market’s high. A good sell off is healthy. I’d Love a full correction so I can get more cash to work. I stopped buying due to general market level a month ago.
Jeff Chevalier
Jeff Chevalier Jan 29, 2021 1:17PM ET
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I went all cash on the 18th of January. This was obviously coming. The Dow went flat early January...
William Smith
William Smith Jan 29, 2021 1:15PM ET
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Nothing to do with Game Stop. Biden's been signing anti business executive orders as fast as Obama's and Soros' folks can put them in front of him. Plus job ***orders and job destroying immigration orders. It's been like a race to Banana Republic status.
Francesc Andre Bertomeu
Francesc Andre Bertomeu Jan 29, 2021 1:15PM ET
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gimme a break. Its Biden's fault. *eye roll*
Francesc Andre Bertomeu
Francesc Andre Bertomeu Jan 29, 2021 1:15PM ET
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gimme a break. Its Biden's fault. *eye roll
Francesc Andre Bertomeu
Francesc Andre Bertomeu Jan 29, 2021 1:15PM ET
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gimme a break. Its Biden? eye roll
john dislias
john dislias Jan 29, 2021 1:11PM ET
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Haha we will not sell .
Javier Vargas
Javier Vargas Jan 29, 2021 1:03PM ET
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So this is what Venezuela feels like
Vlad Lozovskiy
Vlad Lozovskiy Jan 29, 2021 1:03PM ET
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Not yet, but soon.
christos rousakis
christos rousakis Jan 29, 2021 12:52PM ET
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good night
Raymond Pasillas
Raymond Pasillas Jan 29, 2021 12:47PM ET
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They wanted Biden. They r going to get Biden prices.
Catholic Man
CatholicMan Jan 29, 2021 12:44PM ET
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I miss Trump.
Connie Misch
Connie Misch Jan 29, 2021 12:44PM ET
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Agreed!
Nitin Sharma
Nitin Sharma Jan 29, 2021 12:44PM ET
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do u really like jack up prices...
Casador Del Oso
Casador Del Oso Jan 29, 2021 12:38PM ET
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News is overblown. DIJA still over 30K. SP500 still over 3700. Nasdaq still over 13K.
Valking Bob
Valking Bob Jan 29, 2021 12:38PM ET
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not for long! This may only be the tip of the iceberg below sea level.
Kelly Mayer
Kelly Mayer Jan 29, 2021 12:35PM ET
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Novavax 89% effective. And it's not an ecperimental vaccine, which males it safer than genetic modifying vaccined. Where is the news about this in here?
Jeff Chevalier
Jeff Chevalier Jan 29, 2021 12:35PM ET
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EVERYTHING for covid 19 is experimental...
John Patrick
John Patrick Jan 29, 2021 12:22PM ET
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I think more stimulus is needed to fight the corruption and rigging...bwahahaha
 
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