The U.S. stocks fell sharply on Monday at the pandemic’s resurgence in the U.S. fueled expert concerns that the Delta variant of COVID-19 could trigger renewed restrictions and ultimately curtail the economic recovery. Recent news about the pandemic may seem strange to people in countries where masks are no longer required thanks to vaccinations.
According to the World Health Organization COVID-19, cases and deaths are climbing globally after a period of decline. The highly contagious Delta variant created huge pressure on the health care system. And given how tightly connected the global economy is, a hit anywhere can quickly affect others on the other side of the globe. Even in the U.S., where the vaccination rate is higher than in many other countries, the pandemic is not over. People in Los Angeles County, which is the most populous county in the U.S. must once again wear masks indoors.
The economy is recovering at a surprisingly high rate, but investors are still concerned. The new Delta variant has the chance to threaten the high prices that stocks added, thanks to expectations that the economy will fulfill those forecasts.
The Dow Jones Industrial Average plunged 725.81 points or 2.1%, to 33,962.04, its biggest decline since October. The S&P 500 declined 1.6% to close at 4,258.49, after setting a record high just a week ago. The Nasdaq Composite fell 1.1% to 14,274.98.
Airlines, as well as stocks of other travel-related companies that would suffer the most by potential COVID-19 restrictions, experienced some of the heaviest losses. United Airlines lost 5.5%, cruise operator Carnival dropped 5.7%, and mall owner Simon Property Group declined 5.9%.
The decline circled the globe, with several European markets falling roughly 2.5%.
Nearly 95% of the stocks in the S&P 500 fell on Monday. Even Big Tech stocks declined, Apple fell 3% and Microsoft dropped 1.6%. Such stocks seemed nearly immune to Covid-19 fears during the earlier downturns.
Even companies reporting strong profit growth got carried away in the downtrend. Tractor Supply’s quarterly profit, as well as revenue, exceeded expectations, but its stock fell 4.5%.
Over the S&P 500, analysts are predicting profit growth of nearly 70% for the second quarter from a year earlier. That would be the strongest growth in more than a decade, more precisely since 2009.
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