Dow drops more than 600 points on Indian Delta variant rise Delta

Shares fell Monday, with the Dow plummeting more than 600 points as investors feared a spate of COVID-19 cases triggered by the Indian Delta variant could hold the global economy back.

The Dow Jones Industrial Average fell 626 points, or 1.8%, to 34,062 at 9:54 AM ET.

The S&P 500 fell 1.6% in the first half hour of trading after hitting an all-time high just a week ago.

The Nasdaq composite was down 1.5%.

The Dow Jones Industrial Average fell 626 points, or 1.8%, to 34,062 at 9:54 AM ET. Pictured above is the five-day outlook

Another sign of concern was that 10-year Treasury yields fell to nearly a five-month low. It reached 1.21% as investors looked for safer places to put their money.

Airlines, hotels and stocks of other companies that would be most affected by potential COVID-19 restrictions suffered the heaviest losses, reminiscent of the early days of the pandemic in February and March 2020.

Airlines and cruise ships including Southwest Airlines Co, Delta Air Lines Inc, United Airlines, American Airlines, Royal Caribbean Group, Carnival Corp and Norwegian Cruise Line fell between 3.3% and 6.2%.

Wall Street’s major indices closed lower on Friday, with investors moving into defensive sectors amid concerns that a resurgence in COVID cases could delay a strong economic recovery and derail a sharp market recovery from the 2020 lows.

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

“What we’re seeing here is data or news that’s going to disrupt that kind of serene, low volatility and high corporate earnings, the market will react to that. But you don’t want to see excessive speculation. Some correction is healthy.”

The decline has also circled around the world, with several European markets falling more than 2% on concerns that new virus variants are working particularly hard in economies where vaccination rates are low.

Shares fell Monday, with the Dow plummeting more than 600 points as investors feared a spate of COVID-19 cases triggered by the Indian Delta variant could hold the global economy back.

Shares fell Monday, with the Dow plummeting more than 600 points as investors feared a spate of COVID-19 cases triggered by the Indian Delta variant could hold the global economy back.

The S&P 500 fell 1.6% in the first half hour of trading, after hitting a record high just a week ago

The S&P 500 fell 1.6% in the first half hour of trading, after hitting a record high just a week ago

The Nasdaq composite was down 1.5%

The Nasdaq composite was down 1.5%

The price of US benchmark oil, meanwhile, fell more than 5% after OPEC and the allied countries agreed on Sunday to eventually allow for higher oil production this year.

Experts say Indonesia has become a new epicenter for the pandemic as outbreaks in Southeast Asia worsen.

Meanwhile, some athletes have tested positive for COVID in Tokyo’s Olympic Village, including an American gymnast, with the Games opening Friday.

“The more transferable delta variant is slowing the recovery of ASEAN economies and pushing them further into the doldrums,” said Venkateswaran Lavanya of Mizuho Bank in Singapore.

While vaccination rates are higher in the United States and some other developed economies, the closely linked global economy means that hits anywhere can quickly affect others on the other side of the world.

In Japan, the world’s third-largest economy, the vaccine rollout came later than in other developed countries and has stalled recently. Japan has so far been completely dependent on imported vaccines and only one in five Japanese is fully vaccinated.

Financial markets have been showing signs of growing concern for some time, but the US equity market has remained largely resilient. The S&P 500 has only had two down weeks in the past eight weeks.

However, the bond market is louder in its warnings. 10-year government bond yields are moving in line with expectations for economic growth and inflation, falling from a top position of around 1.75% in March. It was 1.22% on Monday morning, up from 1.29% late Friday.

Analysts and professional investors say a long list of reasons may be behind the sharp moves in the bond market, which is considered more rational and down-to-earth than the stock market. But the core is the risk that the economy will slow down sharply after the current, extremely high growth.

In addition to the new strains of the coronavirus, there are other risks to the economy, including dwindling efforts for pandemic aid from the US government and a Federal Reserve expected to cut its aid to markets later this year.

Concerns about a possible sharp slowdown have especially hurt stocks whose gains are most closely tied to the strength of the economy. Shares of smaller companies, for example, have been scurrying since they peaked in March.

The Russell 2000 index of smaller stocks fell 2.3% on Monday, outpacing losses for their larger Wall Street rivals.

In Europe, Germany’s DAX lost 2.7% and France’s CAC 40 lost 2.6%. London’s FTSE 100 fell 2.3%.

In Asia, Japan’s Nikkei 225 lost 1.3%, Hong Kong’s Hang Seng 1.8% and South Korea’s Kospi 1%. Australian stocks fell 0.9%.

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