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Stocks sink on fears COVID-19 Delta variant will stunt economic recovery

Click to play video: 'U.S. sees COVID-19 resurgence as country’s vaccination effort lags' U.S. sees COVID-19 resurgence as country’s vaccination effort lags
The United States appears to be seeing another wave of the COVID-19, as the Delta variant drives up new infections and hospitalizations across almost every state. As Jennifer Johnson reports, just under half of the population in the U.S. is fully vaccinated. – Jul 18, 2021

A surge in Delta variant infections sparked a broad sell-off on Wall Street on Monday as investors feared renewed COVID-19 shutdowns and a protracted economic recovery.

All three major U.S. stock indexes ended the session sharply lower, with the S&P and the Nasdaq suffering their largest one-day percentage drop since mid-May.

The blue-chip Dow had its worst day in nearly nine months.

The risk-off sentiment also sent U.S. 10-year Treasury yields sliding, pulling rate sensitive banks stock prices with them.

Read more: Israel will have to ‘learn to live’ with COVID-19 as Delta variant surges: PM

“Much of it is related to the Delta (variant),” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “There’s some concern too that maybe the economy is not going to open up as quickly as everyone thinks, and the big boom that everyone’s expecting is going to be more of a pop than a boom.”

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“We’re woefully off of breakneck economic growth, and judging by the activity we’re seeing we’re overestimating a lot of the economic reports,” Nolte added.

The highly contagious COVID-19 Delta variant, now the dominant strain across the globe, has caused a surge in new infections and deaths, nearly exclusively among unvaccinated people.

“Global availability of the vaccine has been an issue from day one.” Nolte said. “That’s been out there for a long time. This is the latest iteration of that. We still have a long way to go.”

Click to play video: 'Los Angeles brings back indoor mask mandate after surge of COVID-19 cases' Los Angeles brings back indoor mask mandate after surge of COVID-19 cases
Los Angeles brings back indoor mask mandate after surge of COVID-19 cases – Jul 16, 2021

Travel and leisure stocks plunged, with the S&P 1500 Airline index and the S&P 1500 Hotel and Restaurant index losing significantly more ground than the broader market.

The CBOE Volatility index, a gauge of investor anxiety, touched its highest level in two months.

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Unofficially, the Dow Jones Industrial Average fell 724.56 points, or 2.09%, to 33,963.29, the S&P 500 lost
68.36 points, or 1.58%, to 4,258.8 and the Nasdaq Composite dropped 152.25 points, or 1.06%, to 14,274.98.

All 11 major sectors in the S&P 500 closed deep in negative territory.

Second-quarter reporting season is under way, with 41 of the companies in the S&P 500 having reported. Of those, 90% have beaten consensus estimates, according to Refinitiv.

Among high-profile names, Netflix, Twitter, Johnson & Johnson, United Airlines and Intel, along with a host of industrials from Honeywell to Harley-Davidson are due to post results this
week.

Read more: ‘Freedom Day’ kicks off in U.K. as country drops remaining COVID-19 restrictions

International Business Machines Corp results are expected shortly.

Analysts now see year-on-year S&P 500 earnings growth of 72% for the April to June period, substantially higher than the 54% annual growth forecast at the beginning of the quarter, per Refinitiv.

Zoom Video Communications Inc announced a $14.7 billion all-stock deal to buy cloud-based call center operator Five9 Inc. The teleconferencing services provider’s shares fell on the news, while Five9’s jumped.

Tech tensions between the United States and China grew more heated with the United States and its allies accusing Beijing of a global hacking campaign while shares of Chinese tech firms listed on foreign exchanges dropped amid fears of regulatory crackdowns.

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U.S.-listed shares of China-based ride-hailing app Didi Global extended their decline.

(Reporting by Stephen Culp; Additional reporting by Devik Jain in Bengaluru; Editing by Cynthia Osterman)

Click to play video: 'UK’s Boris Johnson lays out 5-point plan to lift lockdown, including removing mask mandate' UK’s Boris Johnson lays out 5-point plan to lift lockdown, including removing mask mandate
UK’s Boris Johnson lays out 5-point plan to lift lockdown, including removing mask mandate – Jul 5, 2021

 

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