NEW YORK, RAW – US stock indices have dropped, closing out the Friday session with the biggest weekly fall since October, as investors gauged the ramifications of Johnson & Johnson’s COVID-19 vaccine trial results, while a stand-off between Wall Street hedge funds and small, retail investors added to volatility.

Johnson & Johnson fell 3.56 per cent as one of the biggest weights on both the Dow and S&P500 after the drug maker said its single-dose vaccine was 72 per cent effective in preventing COVID-19 in the United States, with a lower rate of 66 per cent observed globally.

The results compare to the high bar set by two authorised vaccines from Pfizer Inc/BioNTech SE and Moderna Inc, which were about 95 per cent effective in preventing symptomatic illness in key trials when given in two doses. Moderna shares climbed 8.53 per cent while Pfizer shares edged up 0.11 per cent.

Worries of a short squeeze that began earlier in the week resurfaced after an army of retail investors returned to trade shares in stocks such as GameStop Corp and Koss Corp , which shot higher after brokers including Robinhood eased some of the restrictions they had placed on trading.

“The overall picture is that if there is any bad news that suggests or indicates there could be a longer hibernation period for us to be indoors and not consuming or spending that tends to set the market back and a lot of people sit on the sidelines, particularly with that news,” said Sylvia Jablonski, chief investment officer at Defiance ETFs in New York.


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“And then what is going on with (GameStop) and all that stuff, people are a little afraid to trade.”

The surge in volatility has led to a huge increase in volume, totalling more than 20 billion shares in each of the past two sessions across US exchanges for the most active trading days on record going back to 2014, according to Refinitiv data.

Volume across US exchanges on Friday was 17.13 billion shares, compared with the 15.26 billion average for the full session in the past 20 trading days.

The US Securities and Exchange Commission said it was closely monitoring any potential wrongdoing, to both brokerages and social media traders.

The Dow Jones Industrial Average fell 620.74 points, or 2.03 per cent, to 29,982.62, the S&P 500 lost 73.14 points, or 1.93 per cent, to 3,714.24 and the Nasdaq Composite dropped 266.46 points, or two per cent, to 13,070.70.

All three main indices suffered their biggest weekly fall since the end of October, as the Dow lost 3.28 per cent, the S&P fell 3.31 per cent and the Nasdaq declined 3.49 per cent. For the month, the Dow dipped 2.04 per cent, the S&P shed 1.12 per cent and the Nasdaq gained 1.42 per cent.

Market participants have speculated that volatility caused by the short squeezes have led to investor favourites including Apple Inc coming under pressure as hedge funds sell to cover billions of dollars in losses.

Apple shares declined 3.74 per cent while Microsoft fell 2.92 per cent.

Declining issues outnumbered advancing ones on the NYSE by a 2.88-to-1 ratio; on Nasdaq, a 2.38-to-1 ratio favoured decliners.

The S&P 500 posted 7 new 52-week highs and no new lows; the Nasdaq Composite recorded 64 new highs and 16 new lows.