Stocks fell sharply Monday morning amid mounting concerns over the pandemic’s resurgence in the United States—hitting travel and leisure businesses the hardest—as experts worried the highly contagious delta variant of Covid-19 could prompt renewed restriction measures that curtail the economic recovery.
Shortly after the market open, the Dow Jones Industrial Average tumbled 643 points, or 1.9%, while the S&P 500 shed 1.8%, putting each index more than 2% below their closing highs on July 12.
Reflecting uncertainty over the economic recovery, travel stocks and leisure headed up much of the market’s losses, with Carnival Corp., American Airlines, United Air and Norwegian Cruise Lines tanking about 5% apiece.
Oil stocks, which tend to underperform when the market struggles, were also hit hard: Marathon Oil and Occidental fell nearly 6% each, pushed down lower by a weekend deal among international oil producers to help curb recently spiking oil prices.
The tech-heavy Nasdaq, meanwhile, fell a softer 0.9%, buoyed slightly by a swath of biotechnology and pharmaceutical companies faring better than the rest of the market, including drug-makers Moderna, Cytokinetics and Applied Therapeutics.
However, many big-tech companies set to report earnings before month’s end posted sizable losses, with Facebook, Apple and Tesla down 1.1%, 1.8% and 2.2%, respectively.
“The main source of the global gloom is Covid, as the virus launches a resurgence with the delta variant ravaging the large population of unvaccinated people,” Vital Knowledge Media Founder Adam Crisafulli wrote in a Monday note to clients, adding that the market’s recent optimism and record highs have made it especially vulnerable to any perceived setbacks. “A slew of governments have reinstituted various forms of virus-related lockdown restrictions, and investors are growing concerned about the impact this will have on growth [in the second half].”
After crashing last March, the market posted its quickest recovery in history during the pandemic, but experts have increasingly worried that rapidly spreading variants could once again halt economies. Rochelle Walensky, the director of the Centers for Disease Control and Prevention, said Friday some municipalities should consider imposing mask mandates and warned the rapidly spreading Delta variant is causing a “pandemic of the unvaccinated.” The pressure has intensified over the last few days, with Las Vegas and Los Angeles among major cities tightening their Covid-19 guidelines, fueling concerns that state and local governments may once again impose partial lockdowns. About 140 million Americans, roughly 44% of the nation’s population, have yet to receive a single Covid-19 vaccine dose.
5%. That’s how much current concerns over the delta variant could tank the S&P, analyst Thomas Lee of Fundstrat Global Advisors told Marketwatch on Monday, suggesting the index could fall another 3% before losses are reversed. The index is up about 16% this year.
On the deal front, Zoom Video Communications announced Sunday night it plans to acquire cloud company Five9 for $14.7 billion in an all-stock deal, making it Zoom’s largest-ever acquisition. Shares of Zoom are down 2% Monday despite the news.