Stock markets opened 2021 with a selloff, raising questions as to whether the rally in recent months was reaching its end.
In the first minutes of trading Monday morning, markets inched up, setting new records before suddenly turning and dropping into the red.
InÂ afternoon trading, the Dow Jones Industrial Average was down 600 points, or 1.9 percent, returning to the 30,000 milestone it passed for the first time in November. The S&P 500 dropped 74 points, or 2 percent.
Stocks closed out strong in 2020 despite an unprecedented economic crisis caused by the COVID-19 pandemic, as the government pumped massive amounts of cash into the economy and the Federal Reserve dropped interest rates to zero.
The quick development of a COVID-19 vaccine and hopes that the crisis would abate in 2021 helped markets recover from huge initial lossesÂ last February and March to make overall gains by year’s end.
But the precipitous rise has also raised concerns that the market may be overinflated, with prices historically high relative to earnings.
All eyes are now on Georgia’s two Senate runoff races scheduled for Tuesday. If Democrats sweep both contests, theyÂ would flip the Senate and control both chambers of Congress and the White House, albeit by the slimmest of margins.