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Stock futures were flat in overnight trading on Monday after the S&P 500 suffered its first decline in a year since 2016.
Futures contracts on the Dow Jones Industrial Average rose 40 points. The S&P 500 and Nasdaq 100 futures contracts both rose 0.2%.
The moves in futures came after a massive sell off on Wall Street to kick off 2021. The S&P 500 fell 1.5%, posting its worst daily performance since October 27. Ten of the 11 sectors of the S&P 500 posted losses, led by real estate. .
The blue-chip Dow lost 382 points after falling 700 points to its daily low. The Nasdaq Composite fell 1.4% as the FAANG block collapsed to start the new year.
The market’s massive sell-off occurred ahead of Tuesday’s run-off election in Georgia, which will determine whether Republicans can retain control of the Senate. Meanwhile, increasing Covid-19 cases around the world and new lockdown restrictions have continued to keep investors on the lookout.
“Investors are feeling anxious this week,” said Lindsey Bell, chief investment strategist at Ally Invest, in an email. “COVID cases continue to climb, with a new variant of the virus spreading across the world. Tomorrow’s end races in Georgia could decide the makeup of the Senate, and the market has generally performed better in a Congress Split.”
Many fear that higher tax rates and more progressive policies will come true if Democrats take control of the Senate. However, such an outcome could create an opportunity for a bigger and faster spending package, which will help support the market.
“Even if Democrats take control, the margin will be remarkably slim, and analysts are skeptical about whether a significant change in fiscal or regulatory policy is possible,” said Mark Hackett, chief investment research officer at Nationwide, in a note. “Democratic control, however, could trigger another round of coronavirus stimulus and potentially an infrastructure package.”
England imposed a third coronavirus lockdown on Monday as the region grapples with a more transmissible variant of Covid-19. New York state has confirmed its first case of the new strain, Governor Andrew Cuomo said on Monday.
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