Renewed Covid Concerns Drag U.S. Stocks To Lowest Levels In Almost A Month

Stocks moved sharply lower during trading on Monday, extending the pullback seen over the course of last Friday’s session. With the steep drop on the day, the major averages ended the session at their lowest closing levels in almost a month.

The major averages regained some ground going into the close but remained firmly negative. The Dow plunged 725.81 points or 2.1 percent to 33,962.04, the Nasdaq slumped 152.25 points or 1.1 percent to 14,274.98 and the S&P 500 tumbled 68.67 points or 1.6 percent to 4,258.49.

The sell-off on Wall Street partly reflected concerns about a resurgence of the coronavirus, as the delta variant contributes to a spike in infections in the U.S.

According to data from the CDC, the 7-day average of Covid-19 cases in the U.S. has jumped to nearly 30,000 after falling as low as 11,455 a month ago.

The renewed virus concerns led to significant weakness among companies hit hardest by the pandemic, with cruise operators Carnival (CCL), Norwegian Cruise Lines (NCLH) and Royal Caribbean (RCL) posting steep losses.

Airline stocks also moved substantially lower on the day, dragging the NYSE Arca Airline Index down by 4.7 percent to its lowest closing level in well over five months.

Considerable weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil.

Crude for August delivery plummeted $5.39 to $66.42 a barrel following news OPEC and its allies have agreed to steadily end production cuts by September 2022.

Reflecting the weakness in the energy sector, the NYSE Arca Oil Index plunged by 4.2 percent, while the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index tumbled by 3.6 percent and 3.1 percent, respectively.

Banking stocks also saw significant weakness on the day, resulting in a 3.8 percent nosedive by the KBW Bank Index. The index ended the session at its lower closing level in almost four months.

Steel, brokerage, chemical and gold stocks also showed notable moves to the downside on the day, reflecting broad based selling pressure.

In U.S. economic news, the National Association of Home Builders released a report showing an unexpected dip in U.S. homebuilder confidence in the month of July.

The report showed the NAHB/Wells Fargo Housing Market Index edged down to 80 in July from 81 in June. The modest decrease surprised economists, who had expected the index to inch up to 82.

With the unexpected drop, the housing market index slipped to its lowest level since hitting 78 in August of 2020.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index slumped by 1.3 percent, while Hong Kong’s Hang Seng Index tumbled by 1.8 percent.

The major European markets also showed significant moves to the downside. While the U.K.’s FTSE 100 Index plunged by 2.3 percent, the French CAC 40 Index and the German DAX Index plummeted by 2.5 percent and 2.6 percent, respectively.

In the bond market, treasuries moved sharply higher amid the renewed coronavirus concerns. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dove by 11.9 basis points to 1.181 percent.

Looking Ahead

Earnings news is likely to attract attention on Tuesday, with tech giant IBM Corp. (IBM) among the companies releasing their quarterly results after the close of today’s trading.

Halliburton (HAL), KeyCorp (KEY), and Travelers (TRV) are also among the companies due to report their quarter results before the start of trading on Tuesday.

Traders are also likely to keep an eye on the Commerce Department’s report on new residential construction in the month of June.

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