Concerns over the spread of the delta version of the coronavirus that causes COVID-19 intensified Monday, joining a global equity selloff, as tensions between the United States and China escalated. What are the major indices performing these days?
At 33,772, the Dow Jones Industrial Average DJIA, -2.49 percent was down 915 points, or 2.6 percent.
The S&P 500 SPX, -1.97 percent lost 87 points, or 2%, to 4,239 points.
The Nasdaq Composite COMP, -1.44 percent fell 206 points, or 1.4 percent, to 14,219 points.
The Russell 2000 RUT, -1.59 percent, a small-cap index, fell 22 points, or 1.1 percent, to 2,140. A closure below 2,124.15 would indicate a 10% decline from the current high, which would match the widely accepted definition of a market correction.
Stocks finished lower on Friday, with all three major indexes down for the week, snapping a three-week winning streak. The Dow fell 0.5 percent this week, while the S&P 500 fell 1% and the Nasdaq Composite fell 1.9 percent.
What is the market’s driving force? Global equity markets are under pressure. Monday’s spike was ascribed to the continuous rise in COVID-19 cases around the world, as well as concerns about “peak everything” and escalating US-China tensions. MarketWatch quoted Sahak Manuelian, head of stock trading at Wedbush Securities in Los Angeles, as saying, “The delta variant is getting a lot of attention right now as an explanation for weakness.” “Another strong reason is that everything is at its peak: valuations, growth,” he added. “When you factor in the delta variant, you have a good case for why equities are down.” “However, the third issue, which may be the most concerning, is the relationship between the United States and China. They are unquestionably deteriorating.” The Biden administration blamed China on Monday for a theft of Microsoft Exchange email server software earlier this year, which affected tens of thousands of machines throughout the world. China was also singled out by the European Union and the United Kingdom. According to the New York Times, Democratic senators were also scheduled to unveil a plan on Monday to raise $14 billion yearly by levying tariffs on China and other countries that do not considerably reduce global warming emissions. What You Should Know: COVID-19 cases could lead to a decline in the S&P 500, according to an analyst — Invest in these stocks as they fall in price. Concerns about the virus have been particularly problematic on the pandemic front for sectors and industries, such as travel, that were anticipated to benefit the most from the global economy reopening. On fears that the spread of the variation could spark fresh travel restrictions, airline stocks plunged, with the industry-tracking U.S. Global Jets ETF JETS, -3.64 percent down more than 3.2 percent and plane-maker Boeing Co. BA, -5.37 percent, a Dow component, dropping 5.4 percent. Treasurys continued to rise on Monday, putting downward pressure on yields, which move in the opposite direction of prices. After slipping below 1.19 percent for the first time since mid-February, the yield on the 10-year Treasury note TMUBMUSD10Y, 1.194 percent was down nearly 9 basis points to trade near 1.21 percent. In emailed comments, Ryan Detrick, chief market strategist for LPL Financial, said, “Fears over peak economic data and a rise in COVID cases has the market on edge today.” “Of course, keep in mind that the S&P 500 hasn’t experienced a 5% correction since October, so we’re overdue for some turbulence.” In a note, Sam Stovall, chief financial strategist at CFRA, said, “Investors will likely see a further decrease of bond yields as a potential ‘canary in the coal mine’ in the week ahead.” The drops, according to the experts, might potentially overshadow an otherwise solid earnings season. According to John Butters, senior earnings analyst at FactSet, about 85% of S&P 500 businesses have reported outperforming estimates, with none providing guidance lower than expectations thus far. “In an attempt to decipher this message, the market may discount future better-than-expected EPS growth as symptomatic of the present EPS cycle transitioning from the windward to the leeward slope as it approaches its peak, resulting in more volatility,” Stovall said. Read more about Is the bond market mistaken about inflation? This week, about a third of the Dow Jones Industrial Average components and more than 80 S&P 500 businesses are expected to announce quarterly results, kicking off earnings season. Netflix Inc. NFLX, -0.42 percent on Tuesday, and Intel Corp. INTC, -1.13 percent on Thursday are two companies with earnings to look forward to this week. Earnings Forecast: What does a well-developed streaming service entail? Netflix is preparing to show us something new. Oil prices were falling, with the U.S. benchmark CL00, -7.43 percent down 6.8 percent to $66.74 a barrel, after the Organization of Petroleum Exporting Countries and its partners, known as OPEC+, reached an agreement on Sunday to loosen output restraints. Beginning oil August, major producers will increase production by 400,000 barrels per day each month until existing limitations of 5.8 million barrels per day are lifted later next year. Analysts believe the lengthy drop was caused more by fears about the delta variant and a widespread selloff in risky assets than by the OPEC+ decision. Meanwhile, the National Association of Home Builders reported a one-point drop in its monthly confidence index to 80 in July. Which businesses are being scrutinized?
HOOD, Robinhood Markets Inc.
outlined parameters for its initial public offering, in which the retail trading platform based in California could be valued at high to $35.1 billion.
AutoNation Inc. AN, +4.18 percent reported second-quarter profit and revenue that significantly exceeded expectations, with used car sales performing particularly well. The stock was up 4.7 percent.
Five9 Inc. FIVN, +4.46 percent saw its stock rise 5.1 percent after Zoom Video Communications Inc. ZM announced a $14.7 billion all-stock purchase transaction over the weekend. Zoom’s stock dropped 4.4 percent.
Pershing Square Tontine Holdings PSTH, -1.27 percent, owned by Bill Ackman, announced Monday that it was canceling a proposal to buy a 10% stake in Universal Music Group due to regulatory and shareholder concerns. PSTH’s stock was down 1.1 percent.
Cal-Maine Foods Inc. CALM, -5.42 percent reported a surprising fiscal fourth-quarter loss and revenue that fell short of estimates on Monday, with egg sales falling as COVID-19-related limitations were lifted, resulting in fewer meals made at home.
The stock was down 5.5 percent.
What are the trends in other markets?
The ICE U.S. Dollar Index DXY, +0.15%, which measures the currency against a basket of six major rivals, increased by 0.1 percent.
Gold futures GC00, -0.32 percent were trading at $1,807.80 an ounce, down 0.4 percent.
In European shares, the Stoxx Europe 600 SXXP, -2.30 percent fell 2.3 percent, the most in a single day since December 2020, while London’s FTSE 100 UKX, -2.34 percent fell 2.3 percent.
In Asia, the Shanghai Composite SHCOMP, -0.01% declined fractionally, while the Hang Seng Index HSI, -1.84 percent sank 1.8 percent and Japan’s Nikkei 225 NIK, -1.25 percent fell 1.3 percent./n
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