Concerns about the resurrected pandemic were boosted by a plunge in stock prices on Wall Street on Monday and concerns that a more rapidly spreading variant of the coronavirus could overturn the US economic recovery.
The S & P 500 closed at 1.59% lower after hitting a record high just a week ago. Another sign of concern is that 10-year US Treasury short-term securities yields reached their lowest levels in five months as investors scrambled to put money in a safer place.
The Dow Jones Industrial Average reached 33,962.04 with 725.81 points (down 2.09%). The Nasdaq Composite fell 152.25 points (1.06%) to close at 14,274.98.
As in the early days of the February and March 2020 pandemics, stocks of US airlines and other companies most affected by potential COVID-19 restrictions suffered the most losses on Monday. Simon Property Group, the owner of the mall, fell 5.9%. Cruise operator carnival lost 5.5%.
The fall went around the world, with some European markets falling about 2.5% and the Asian index falling slightly. Meanwhile, US crude oil benchmark prices have fallen by more than 6% after OPEC and its allies finally agreed on Sunday to allow an increase in oil production this year.
Thanks to the COVID-19 vaccination, growing concerns about the coronavirus may seem strange to some people in the world who are unmasked or already infected. However, the World Health Organization states that cases and mortality are increasing globally after a period of decline, stimulated by highly contagious delta mutants. And given how tightly connected the world economy is, hitting everywhere can quickly affect others on the other side of the world.
Experts say Indonesia has become a new epicenter of the pandemic as outbreaks worsen throughout Southeast Asia. Meanwhile, some athletes tested positive for COVID-19 in the Olympic Village in Tokyo, and the Olympics are scheduled to begin on Friday.
Even in the United States, where vaccination rates are generally high, people in Los Angeles County will need to wear masks indoors again, regardless of whether they have been vaccinated following a surge in cases, hospitalizations, and deaths.
Across the United States, the daily number of COVID-19 infections has increased by about 20,000 over the past two weeks to about 32,000. Vaccine campaigns have hit a wall and average daily doses have fallen to their lowest levels since January. Cases are increasing in all 50 states.
Local coronavirus outbreaks are beginning to affect unvaccinated communities in places like Missouri and Arkansas where hospitals are running out of space again. Almost all COVID-19 patients in the hospital are unvaccinated. Over 68% of the US adult population has been vaccinated at least once, and 59% have been fully vaccinated. And about 12 states have not yet vaccinated 40% of their population.
Financial markets have shown signs of heightened concern for some time, but the US stock market has generally remained resilient. The S & P 500 has been down for just two weeks in the last eight weeks, with a 5% pull back from a record high in October.
Some analysts pointed out the background of the highs and very mild movements for several weeks while analyzing the price decline on Monday.
“It’s a bit overreacting, but if there’s a market at record highs, it’s an execution like we did, with virtually no pullbacks and very vulnerable to all sorts of bad news. “It will be,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “It was a question of what the turning point was, and we seem to have finally reached it this morning,” worried about the Delta variant.
He and other analysts are optimistic that stock prices could recover soon. Investors have recently been trained to see all the declines in stocks simply as an opportunity to buy at low prices. In addition, the general expectation is that the economy will continue to grow.
Barry Banister, Stifel’s chief equity strategist, was more pessimistic. He states that the stock market may be in the early stages of falling by as much as 10% after a sharp rise in prices. The S & P 500 has almost doubled since it bottomed out in March 2020.
“The evaluation was too foamy,” he said. “There was so much optimism there.”
The bond market was bigger and more sustainable in its warning. Yields on 10-year government bonds tend to fluctuate in response to expectations of economic growth and inflation, down from about 1.75% in late March. Monday fell from 1.29% on Friday to 1.19%.
Analysts and professional investors say the long list of reasons could be behind the upheaval in the bond market, which is considered more rational and calm than the stock market. But at the core is the risk that the US economy could slow sharply from its current very high growth.
In addition to new variants of the coronavirus, other risks to its economy include the decline of US government pandemic bailout efforts and the Federal Reserve, which is expected to begin reducing support for the market later this year. ..
Selling pressure was widespread on Monday, with 95% of S & P 500 shares declining. Even Big Tech stocks have fallen, Apple has fallen 2.9% and Microsoft has fallen 1.6%. Such stocks appeared to be largely immune to the fear of the virus during the early recession and rose on the expectation that they would continue to grow regardless of economic strength.
Losses occurred despite some companies reporting stronger profit growth from April to June than analysts expected. For example, Tractor Supply said both profits and earnings exceeded Wall Street’s expectations, but shares fell 4.5%.
Analysts predict second-quarter earnings growth of around 70% year-over-year across the S & P 500. It will be the strongest growth since 2009, when the economy emerged from the Great Recession.
But as concerns grow that economic growth has already peaked, analysts are trying to handicap how much growth will slow in the coming quarters and years for the benefit of the company. is.
Wall Street drops sharply as Delta Variants spy on investors.Business and economic news
Source link Wall Street drops sharply as Delta Variants spy on investors.Business and economic news