Stocks skid as virus fears shake markets; Dow falls 2.1%

New York Stock Exchange, Photo Date: 9/23/2019 | White House / Andrea Hanks | License Link

Stocks skidded on Wall Street, and investors sought refuge in government bonds amid worries that fast-spreading variants of the coronavirus will threaten the economic recovery.

Posted: Jul 19, 2021 4:32 PM

NEW YORK (AP) — Resurgent pandemic worries knocked stocks lower from Wall Street to Tokyo on Monday, fueled by fears that a faster-spreading variant of the virus may upend the economy's strong recovery.

The S&P 500 fell 68.67, or 1.6%, to 4,258.49, after setting a record just a week earlier. In another sign of worry, the yield on the 10-year Treasury touched its lowest level in five months as investors scrambled for safer places to put their money.

The Dow Jones Industrial Average slumped 725.81, or 2.1%, to 33,962.04, while the Nasdaq composite lost 152.25, or 1.1%, to 14,274.98.

Airlines and other companies that would get hurt the most by potential COVID-19 restrictions took some of the heaviest losses, similar to the early days of the pandemic in February and March 2020. United Airlines lost 5.5%, mall owner Simon Property Group gave up 5.9%, and cruise operator Carnival fell 5.7%.

The selling also circled the world, with several European markets sinking roughly 2.5% and Asian indexes down a bit less. The price of benchmark U.S. crude, meanwhile, fell more than 7% after OPEC and allied nations agreed on Sunday to eventually allow for higher oil production this year.

Increased worries about the virus may seem strange to people in parts of the world where masks are coming off, or already have, thanks to COVID-19 vaccinations. But the World Health Organization says cases and deaths are climbing globally after a period of decline, spurred by the highly contagious delta variant. And given how tightly connected the global economy is, a hit anywhere can quickly affect the other side of the world.

Even in the U.S., where the vaccination rate is higher than in many other countries, people in Los Angeles County must once again wear masks indoors regardless of whether they're vaccinated following spikes in cases, hospitalizations and deaths.

Across the country, the daily number of COVID cases has soared by nearly 20,000 over the last two weeks to about 32,000. The vaccine campaign has hit a wall, with the average number of daily inoculations sinking to the lowest levels since January, and cases are on the rise in all 50 states.

That's why markets are concerned, even though reports show the economy is still recovering at a fantastically high rate and the general expectation is for it to deliver continued growth. Any worsening of virus trends threatens the high prices that stocks have achieved on expectations the economy will fulfill those lofty forecasts.

Financial markets have been showing signs of increased concerns for a while, but the U.S. stock market had remained largely resilient. The S&P 500 has had just two down weeks in the last eight, and the last time it had even a 5% pullback from a record high was in October.

Several analysts pointed to that backdrop of high prices and very calm movements for weeks while dissecting Monday’s drop.

“It’s a bit of an overreaction, but when you have a market that’s at record highs, that’s had the kind of run we’ve had, with virtually no pullback, it becomes extremely vulnerable to any sort of bad news," said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “It was just a matter of what that tipping point was, and it seems we finally reached that this morning” with worries about the delta variant.

He and other analysts are optimistic stocks can rebound quickly. Investors have been trained recently to see every dip in stocks as merely an opportunity to buy low.

Barry Bannister, chief equity strategist at Stifel, was more pessimistic. He says the stock market may be in the early stages for a drop of as much as 10% following its big run higher. The S&P 500 nearly doubled after hitting its bottom in March 2020.

“The valuations, they just got too frothy," he said. “There was just so much optimism out there.”

The bond market has been louder and more persistent in its warnings. The yield on the 10-year Treasury tends to move with expectations for economic growth and for inflation, and it has been sinking since late March, when it was at roughly 1.75%. It fell to 1.20% Monday from 1.29% late Friday.

Analysts and professional investors say a long list of potential reasons is behind the sharp moves in the bond market, which is seen as more rational and sober than the stock market. But at the heart is the risk the economy may be set to slow sharply from its current, extremely high growth.

Besides the new variants of the coronavirus, other risks to the economy include fading pandemic relief efforts from the U.S. government and a Federal Reserve that looks set to begin paring back its assistance for markets later this year.

Monday's selling pressure was widespread, with nearly 90% of the stocks in the S&P 500 lower. Even Big Tech stocks fell, with Apple down 2.7% and Microsoft 1.3% lower. Such stocks seemed nearly immune to virus fears during earlier downturns, rising with expectations for continued growth almost regardless of the economy's strength.

Across the S&P 500, analysts are forecasting profit growth of nearly 70% for the second quarter from a year earlier. That would be the strongest growth since 2009, when the economy was climbing out of the Great Recession.

But just like worries are rising that the economy's growth has already peaked, analysts are trying to handicap by how much growth rates will slow in upcoming quarters and years for corporate profits.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 479326

Reported Deaths: 9353
CountyCasesDeaths
Harrison32779484
Hinds30924582
DeSoto30319353
Jackson23542341
Rankin21235366
Lee14803219
Madison14120271
Jones13327223
Forrest13078236
Lauderdale11501303
Lowndes10377176
Lamar10163130
Pearl River9008217
Lafayette8193137
Hancock7404111
Oktibbeha6909122
Washington6900150
Monroe6459159
Neshoba6441201
Warren6387163
Pontotoc623093
Panola6203125
Bolivar6072144
Marshall6068121
Union571386
Pike5574135
Alcorn533289
Lincoln5283131
George466072
Scott454796
Leflore4444140
Prentiss443377
Tippah442180
Itawamba441599
Adams4376116
Tate4327101
Simpson4313112
Wayne430766
Copiah429587
Yazoo419686
Covington413292
Sunflower4123104
Marion4073104
Leake395486
Coahoma391098
Newton367274
Grenada3543104
Stone350359
Tishomingo333288
Attala324286
Jasper313162
Winston303091
Clay294173
Chickasaw286265
Clarke279890
Calhoun263940
Holmes261387
Smith248048
Yalobusha219647
Tallahatchie217550
Walthall209958
Greene206845
Lawrence205732
Perry198553
Amite197651
Webster195042
Noxubee177739
Montgomery171654
Jefferson Davis167442
Carroll161437
Tunica150834
Benton141533
Kemper138039
Claiborne126134
Choctaw126026
Humphreys125937
Franklin116328
Quitman103426
Wilkinson101536
Jefferson87333
Sharkey62320
Issaquena1926
Unassigned00

Alabama Coronavirus Cases

Cases: 778549

Reported Deaths: 13665
CountyCasesDeaths
Jefferson1105871747
Mobile704651206
Madison49152610
Baldwin35946479
Shelby35796302
Tuscaloosa33410532
Montgomery32906672
Lee22231216
Calhoun20791397
Morgan19605326
Etowah18837449
Marshall17465272
Houston16452368
St. Clair15233293
Limestone14376182
Cullman14348246
Elmore14241256
Lauderdale13298278
Talladega12699230
DeKalb12036233
Walker10430323
Autauga9568133
Blount9555152
Jackson9235146
Coffee8728169
Colbert8426179
Dale8410170
Escambia6526114
Tallapoosa6501172
Covington6396163
Chilton6293141
Russell598555
Franklin5719100
Chambers5315133
Marion4734115
Dallas4665182
Clarke457076
Pike456294
Geneva4315116
Winston417192
Lawrence4086108
Bibb401680
Barbour341968
Marengo323183
Butler314988
Monroe314652
Pickens300470
Randolph299955
Henry298356
Hale289383
Cherokee284652
Fayette275672
Washington244848
Crenshaw235168
Clay225163
Macon217657
Cleburne217149
Lamar192140
Conecuh179646
Lowndes170158
Coosa166432
Wilcox155736
Bullock147742
Perry136036
Sumter124136
Greene120142
Choctaw72826
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Canadian high pressure will continue to build into our area over the next few days. This will bring into our area some of the coolest air of the season so far. Some folks will see overnight lows down into the middle to upper 40s.
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