The Dow Fell 623 Points Because Negative Vaccine News Knocked Down Stocks
Stocks continued a general downtrend for the week, as negative vaccine news hit the wires. Heavy selling was in the cards, already, anyway.
Dow Jones Industrial Average
tumbled 620.74 points, or 2.03%, to close at 29,982.62. The
fell 73.14 points, or 1.93%, to end at 3,714.24, and the
dove 266.46 points, or 2.00%, to close at 13,070.69. The biggest gainer in the S&P 500 was hard-drive maker
(WDC), whose shares soared 7.2% after earnings.
As for the broader market weakness, there were still some hedge funds selling out of long positions to meet cash requirements with brokers, who are now tightening restrictions, Ihor Dusaniwsky, managing director at S3 Partners, told Barron’s. Much of that activity is continued fallout from the options activity that took stocks down earlier in the week.
Importantly, investors can meet these cash requirements by drawing on existing cash, but that cash pile across institutional funds has been trending down aggressively in the past several months because interest in stocks remained strong for much of January. “If they [funds] don’t have excess reserves, they would have to sell some of their liquid assets,” Dusaniwsky said. These trends are consistent with the idea that many strategists had already been calling for a correction in stocks, which has potentially begun.
Meanwhile, the economic outlook took a hit Friday.
(NVAX) said its vaccine is about 90% effective, but that it works less well against the South Africa strain. The stock rose 65%.
Johnson & Johnson
(JNJ) said its vaccine is just 66% effective at preventing moderate to severe coronavirus, but that it is 100% effective in preventing hospitalizations and death 28 days after it is administered. The stock fell 3.4%.
Stocks whose prosperity depends on an economic reopening in particular took a beating. United Airlines Holdings (UAL),
Norwegian Cruise Line Holdings
(CCL) slid 6%, 6%, and 5%, respectively.
The S&P 500 has fallen almost 4% since the open on Tuesday, now sports a year-to-date loss of 1.1%.
Write to Jacob Sonenshine at firstname.lastname@example.org
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Dow Jones – The Dow Fell 623 Points Because Negative Vaccine News Knocked Down Stocks