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U.S. Stocks Wobble to Start 2021

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U.S. stocks wobbled between small gains and losses on the first trading day of the year, with investors hoping the rollout of coronavirus vaccines will help the economy slowly recover ground in the coming months.

Major indexes opened higher but wobbled shortly after the opening bell. The Dow Jones Industrial Average slipped 54 points, or 0.2%. The S&P 500 was flat, and the Nasdaq Composite advanced 0.1%.

The Dow and S&P 500 closed at record levels Dec. 31.

Investors are starting the new year on an optimistic note. Although the novel coronavirus pandemic has continued to spread, with U.S. hospitalization rates climbing to a record high Sunday, many money managers believe economic activity will be able to pick up this year.

“There is still really bad news on the virus, but the market is looking through that because of the vaccines,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “We are certainly positively tilted, given the expected economic recovery, historically low interest rates, a lot of fiscal spending and monetary policy to come: all of that positivity remains.”

Tesla climbed 1.8% after the electric-car maker said it delivered a record 499,550 cars last year, just shy of its half a million target.

Roku added 1.4% following reports that it is in talks to acquire the content catalog of short-form streaming service Quibi.

Overseas, the pan-continental Stoxx Europe 600 rose 1.4%.

The U.K.’s FTSE 100 was the best-performing major index in Europe, jumping 2.7%. The trade deal struck on Christmas Eve between the U.K. and the European Union is likely delivering a boost to British stocks, said Sebastian Mackay, a multiasset fund manager at Invesco.

“A lot of the tail risks of a no deal [Brexit] have been removed now. This will lead people to start dipping their toes again in the U.K. market,” he said.

Investors also said they were reassured by newly released data on the health of the manufacturing sector. Factories in Asia and Europe increased their output as 2020 drew to a close, according to surveys of purchasing managers that showed strong rises in activity during December.

“We’re going through renewed lockdowns, which is curtailing activity to some extent, but what we’ve seen through the pandemic is that manufacturing activity tends to hold up quite well,” Mr. Mackay said.

Among European equities, British gaming company
Entain
soared 28% after it confirmed a takeover bid from
MGM Resorts International.
The offer values the company at £8.09 billion, equivalent to $11.06 billion.

Most major stock benchmarks in the Asia-Pacific region advanced. South Korea’s Kospi Composite led gains, rising 2.5%.

South Korea’s Kospi Composite Index gained almost 2.5% in the first day of trading in the new year.

South Korea’s Kospi Composite Index gained almost 2.5% in the first day of trading in the new year.

Photo: jung yeon-je/Agence France-Presse/Getty Images

China’s Shanghai Composite gained 0.9%, even after a private survey showed China’s manufacturing activity moderated in December due to weak demand for the country’s exports.

Ben Luk,
senior multiasset strategist at State Street Global Markets, said the data pointed to continued fragility in the Chinese economy. But he said that helped ease concerns that China’s central bank would act prematurely to tighten monetary policy.

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Japan’s Nikkei 225 dropped 0.7% by the end of trading after Prime Minister

Yoshihide Suga
said he might declare a state of emergency in Tokyo and surrounding areas as new coronavirus infections continue to rise.

Paul Sandhu,
head of multiasset quant solutions for the Asia-Pacific region at BNP Paribas Asset Management, said markets in Asia had largely picked up where they left off in 2020, as investors continue to favor riskier assets like equities in emerging markets such as China, South Korea and Taiwan. He said he expected Asia to be one of the most robust parts of global markets, due in part to its relative success in containing the coronavirus.

Write to Joanne Chiu at joanne.chiu@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com