The moves in futures came after a sharp sell-off on Wall Street to kick off 2021. The S&P 500 fell 1.5%, posting its worst daily performance since Oct. 27. Ten out of 11 S&P 500 sectors registered losses, led by real estate.
The blue-chip Dow shed 382 points after tumbling as much as 700 points at its low of the day. The Nasdaq Composite declined 1.4% as the FAANG block all slumped to start the new year.
The broad market sell-off occurred ahead of Tuesday’s Georgia runoff elections, which will determine whether Republicans can hold on to control in the Senate. Meanwhile, rising Covid-19 cases globally and new lockdown restrictions continued to keep investors on edge.
“Investors are feeling antsy this week,” Lindsey Bell, chief investment strategist at Ally Invest, said in an email. “COVID cases continue to spike, with a new variant of the virus spreading across the globe. Tomorrow’s runoff races in Georgia could decide the makeup of the Senate, and the market generally has performed better in a split Congress.”
Many fear that increased tax rates and more progressive policies could become reality if Democrats gain 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 the Democrats gain control, the margin will be remarkably thin, and analysts are skeptical over whether a meaningful shift in tax or regulatory policy is possible,” Mark Hackett, Nationwide’s chief of investment research, said in a note. “Democrat control could, however, spark another round of coronavirus stimulus and potentially an infrastructure package.”
On Monday, England imposed a third coronavirus lockdown as the region grapples with a more transmissible variant of Covid-19. New York state has confirmed its first case of the new strain, Gov. Andrew Cuomo said Monday.