Despite a welcome development for U.S.-listed Chinese telecom stocks, the broader market is struggling to add back to Monday losses as all eyes remain on the Georgia Senate runoffs that should provide investors much-needed clarity on the political landscape for the next two years.
Shortly after the market open, the S&P 500 and Dow Jones Industrial Average were each down about 0.1%, or 4 points for the former and 33 points for the latter, while the tech-heavy Nasdaq was virtually flat.Â
Cruise-line stocks, which have been buoyed in recent weeks thanks to vaccine optimism and the prospects of a split Congress, led losses in the S&P Tuesday, with Norwegian and Carnival dropping about 2% each.
Shares of China Mobile, China Telecom. and China Unicom shot up 11%, 10% and 15% Tuesdayâ€“recouping nearly all of their past week’s lossesâ€“after the NYSE said it was dropping plans to delist the Chinese telecom firms pursuant to an executive order from President Donald Trump following conversations with regulators.Â
Fragrance-maker Coty said Tuesday morning it has completed its acquisition of a 20% stake in Kim Kardashian West’s business for $200 million; its shares are flat Tuesday and down nearly 40% over the past year.Â
In a note to clients Tuesday morning, Bank of America strategist Savita Subramanian reiterated the firm’s expectations that value-oriented firms in cyclical sectors like financials and energy will lead growth in 2021 and warned that as the bull market rages on, she sees near-term risk skewed to the downside.Â
Global markets were similarly tepid, with Japan’s Nikkei 225 closing the day down 0.4%, while the United Kingdom’s FTSE 100 was roughly flat, and Germany’s DAX Index shed 0.8%.
“There was some positive momentum coming from Asia and Europe Tuesday morning, but that quickly petered out on Wall Street. Last year ended on such a high that I wonder whether we’re just seeing some profit-taking in an uncomfortable period for the global economy,” says Craig Erlam, a senior market analyst at OANDA, noting that Covid is once again forcing countries to impose harsher restrictions (including the United Kingdom Monday night) and that massive uncertainty remains over the Senate run-off elections. If Democrats pull off an unexpected two victories, investors are expecting heightened regulation and higher taxes for corporations.Â
What To Watch For
At best, results for the Senate runoffs should be known by late Tuesday night or early Wednesday, says Adam Crisafulli, the founder of Vital Knowledge Media. “The knee-jerk reaction to a [Democrat]-led Senate is net negative for equitiesâ€“as was witnessed Monday.”
Leading intergovernmental oil cartel OPEC-plus is once again split over whether or not to increase crude oil output, with Russia favoring an increase while Saudia Arabia leads efforts to hold off on an increase for at least another month. Many in the cartel worry increasing production too soon could create a supply glut that tanks prices, as happened earlier in the pandemic. The group will try to come to an agreement on production Tuesday.Â
Tesla shares are down nearly 1% Tuesday, but they’ve been surging in the two weeks since their addition to the S&P 500, closing at an all-time high on Monday and up 12% since Dec. 21.Â