Variant fears batter stocks
Worried over resurgence, markets suffer worst day in months
NEW YORK — Resurgent pandemic worries knocked stocks lower from Wall Street to Tokyo on Monday, fueled by fears 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 10year 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 steep drop knocked several Pittsburgh companies down another peg. Many also lost ground on Friday due to spreading fears of the delta variant of COVID-19.
PNC Financial Services fell 3.07% to $177.80; Alcoa saw a 4.04% drop to $ 31.62; Westing-House Air Brake Technologies Corp. ended 4.06% lower in Monday’s trading; and Consol Energy Inc. had a 4.34% decline to $17.42.
Pittsburgh stocks that experienced price declines that were less severe were Kennametal Inc., which lost 1.46%, closing at $33.18; and Dick’s Sporting Goods, which
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.
Virus worries 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, 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 U.S., daily number of COVID-19 cases has soared by nearly 20,000 over the past 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. Any worsening of virus trends threatens the high prices that stocks have achieved on expectations the economy will fulfill 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 past eight, and the last time it had even a 5% pullback from a record high was in October.
“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 and 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.”