The S&P 500 and the Dow have eased from record levels on the first trading day of the year as nerves over the outcome of run-off elections in the US state of Georgia this week countered optimism over a vaccine-driven recovery in the global economy.

The Dow was also dragged down by a near 3.0 per cent fall in Boeing Co shares after Bernstein cut its rating to “underperform”, saying issues with MAX 787 could significantly hurt the US plane maker’s free cash flow.

The fate of US president-elect Joe Biden’s agenda including rewriting the tax code, boosting stimulus and infrastructure spending hinges firmly on Tuesday’s twin Senate races in the battleground state of Georgia that will determine control of the chamber.

“Its a small reversal but I think people came in the morning to start the year with some optimism but the cloudy political picture in the US is weighing down the markets a little bit,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“Senate race in Georgia is now a toss up. The Georgia run off is the much bigger risk as investors have already decided that COVID will be mostly behind us later in the year.”

Wall Street’s major averages rounded off 2020 with strong gains as a wave of monetary stimulus and promising developments on the vaccine front helped the indexes recover from their sharpest contraction in decades.

US manufacturing activity picked up at its briskest pace in more than six years in December, a survey indicated on Monday.

It comes on the heels of upbeat factory activity surveys across Europe and Asia earlier in the day.

On the vaccine front, Britain on Monday became the first country to roll out the COVID-19 shot developed by Oxford University and AstraZeneca.

Some investors are cautious about the pace of economic growth as US jobless claims remain stubbornly high while a new round of business closures last month and the discovery of a new variant of the coronavirus have cast a shadow on the outlook.

In early trading, the Dow Jones Industrial Average fell 182.45 points or 0.60 per cent to 30,424.03, the S&P 500 lost 15.82 points or 0.42 per cent to 3,740.25 and the Nasdaq Composite lost 34.18 points or 0.27 per cent to 12,854.10.

Energy and materials were the only two sectors trading higher.

Real estate, utilities and industrials posted the sharpest percentage declines.

Tesla Inc shares extended a meteoric rally to scale a record high after the electric-car maker reported better than expected vehicle deliveries in 2020.

Shares of FLIR Systems jumped about 20 per cent after Teledyne Technologies Inc agreed to buy the thermal imaging camera supplier for $US8 billion ($A10 billion) in cash and stock.

Teledyne shares dropped about 8.0 per cent.

Advancing issues matched decliners on the NYSE and outnumbered decliners by a 1.3-to-1 ratio on the Nasdaq.

The S&P 500 posted 52 new 52-week highs and no new low while the Nasdaq recorded 255 new highs and 11 new lows.