S&P 500 Drops 1.5% on First Trading Day of 2021 - Barron's

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Three numbers to start your day:

Mortgage Forbearance Plans Up 13,000 in December

That was compared with the previous month, according to mortgage data analytics company Black Knight.

For context, there are about 53 million residential mortgages in the U.S. Forbearance—along with foreclosure moratoriums—has helped keep Americans in their homes during the coronavirus pandemic. There were just over 2.8 million mortgages in forbearance at the end of last year, down from a peak of about 5 million in May.

These measures have also supported house prices by keeping homes off the market. Demand for forbearance programs has been rising modestly as the economy weakened during the third wave of the virus.

S&P 500 Drops 1.5% in First Trading Day of 2021

It’s the seventh biggest first-day drop on record. Only 1932, 2001, and 1980 were meaningfully worse.

Investors may have been eager to cash out winning positions from the end of last year. An analysis from the Bespoke Investment Group indicates that the stocks that had gained the most in the second half of 2020, such as Peloton Interactive and Netflix, were also the ones that sold off the hardest in the opening of 2021.

In general, the first-day performance of the stock market doesn’t say much about what will happen in the rest of the year. Stock indexes tend to go up over longer periods of time even if they can be volatile day-to-day.

And most of the years with the biggest first-day drops have ended positively.

U.S. Net International Investment Position Hits -$14 Trillion in Third Quarter

That is according to new data from the Bureau of Economic Analysis. Americans owned about $27 trillion in foreign assets excluding derivatives, while investors in the rest of the world owned about $41 trillion of U.S. assets, excluding derivatives.

About $16 trillion of Americans’ foreign asset holdings represent equity in businesses, whether they are subsidiaries of U.S. companies or shares of publicly traded foreign companies. Almost $10 trillion is either bonds, bank loans, bank deposits, or other debt instruments.

By contrast, foreigners own more than $19 trillion in equity in U.S. businesses either through their ownership of subsidiaries or holdings of stock. Americans also owe $22 trillion to foreign investors in the form of bonds, bank loans, deposits, and other debts.

America’s net international investment position has deteriorated this year mostly because U.S. stocks have substantially outperformed markets in the rest of the world. In other words, the value of foreigners’ holdings has grown faster than the value of Americans’ foreign investments.

Numbers by Barron’s is our daily podcast. Find out more here.

Write to Matthew Klein at matthew.klein@barrons.com

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