Wall Street Drops Over 1% As Virus Surge Sparks Recovery Worries

Wall Street’s main indexes fell more than 1% on Monday, with economically sensitive and travel stocks leading declines, as a spike in global COVID-19 cases raised fresh concerns about slowing economic growth.

New infections surged in parts of Asia and England, while U.S. COVID-19 cases soared 70% last week, fueled by the Delta variant.

All 11 S&P sectors fell in early trading, with the so-called value stocks including financial, industrial, materials and energy dropping between 1.8% and 3.7%.

The banking sub-index sank 3.3%, tracking a fall in the benchmark 10-year Treasury yield to mid-February lows. [US/]

“Before the Delta variant started gaining traction, things were priced in for a very strong recovery,” said David Grecsek, managing director of investment strategy and research at Aspiriant in New York.

“What we’re seeing today is any data or news that’s going to upset that sort of serene, low-volatility-and-high-corporate-earnings scenario, the market is going to react to that.”

The benchmark S&P 500 snapped a three-week winning streak on Friday, with only defensive sectors – perceived to be relatively safe during times of economic uncertainty – posting small gains.

On Monday, the technology-heavy Nasdaq index outperformed the broader market as investors again sought safety in the growth-linked stocks that led Wall Street’s recovery from its coronavrirus-lows last year.

Still, by 9:57 a.m. ET, the Nasdaq was down 1.53%. By comparison, the Dow Jones Industrial Average was down 1.83%, while the S&P 500 was down 1.61%.

The CBOE volatility index, dubbed Wall Street’s fear gauge, jumped to a two-month high.

Shares of travel-related companies, which had just begun to climb after suffering steep losses during pandemic-driven lockdowns last year, fell again on Monday. The S&P 500 Airlines index fell 5.4%.

Cruiseliners Royal Caribbean Group, Carnival Corp and Norwegian Cruise Line dropped more than 6%.

After strong quarterly reports from big banks last week, focus now shifts to tech earnings with companies including IBM, Netflix, Texas Instruments and Intel set to report this week.

Analysts on average expect 72% year-on-year growth in earnings per share for S&P 500 companies, according to IBES estimate data from Refinitiv.

U.S.-listed shares of Alibaba Holding, Baidu and ridesharing app Didi Global declined between 3.6% and 6.6% on renewed fears of anti-monopoly action against major technology firms.

Zoom Video Communications Inc slipped 4.3%.after the teleconferencing services provider announced a $14.7 billion all-stock deal to buy cloud-based call center operator Five9 Inc.

Five9’s shares jumped 3.6%.

Declining issues outnumbered advancers 8.80-to-1 on the NYSE and 6.48-to-1 on the Nasdaq.

The S&P index recorded eight new 52-week highs and no new low, while the Nasdaq recorded nine new highs and 189 new lows.

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