The Stock Market Fell the Most Since October. Why Big Tech Is Part of

And it wasn’t all that different from what was worrying the market back in October, even if the extent of the worry was much smaller. That was the week before the election, and investors were on edge. The path of Covid-19 and its impact on the U.S. economy—and on economic data like October’s nonfarm payrolls—was also a concern. The first read on coronavirus vaccines was also imminent, and expectations were low.

Everything turned out fine. The presidential election turned out to be a political event, not a market one, payrolls surprised to the upside, and then, on Nov. 9,

Pfizer

(ticker: PFE) announced that early data showed its vaccine had an efficacy rate of greater than 90%. The stock market hasn’t dropped more than 1% since then.

Until now. This past week—with the market looking ahead to the inauguration and what might be in store following the Capitol riots and Donald Trump’s second impeachment—was a terrible one for economic data. Whether it was small-business confidence, consumer inflation, or just about anything else, the numbers painted a picture of an economy that was slowing more rapidly than expected. Initial jobless claims, which spiked to their highest level since August, and retail sales, which fell 0.7%, were particularly frightening.

Of course, there were good reasons for all this. Covid cases have been surging—global deaths have now topped two million—and much of the economic damage is due to the renewed lockdowns across the country. But there’s another factor, says Jefferies economist Aneta Markowska: fiscal drag. The first Covid relief package was followed by a surge in retail sales, which slowed as the money and benefits ran out. They could rebound by more than 10% month over…