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U.S. stocks fell aggressively on Monday over fears that a rebound in Covid-19 cases could slow global economic growth.
The Dow Jones fell 804 points soon after the opening, surpassing January’s 2% decline, while the S&P 500 fell 1.9%. The Nasdaq Composite fell 1.6%.
Stocks that would benefit most directly from a rapid and continued reopening of the economy led the losses, with United Airlines shares falling more than 7%. Key stocks linked to the global economy retreated, with Boeing and General Motors each falling more than 5%.
“Consumer concerns about inflation as well as an increase in new cases of Covid-19 among vaccinated Americans could weigh on consumer confidence in the coming months, even as employment and incomes rise as the economy is reopening, ”said Oppenheimer’s chief investment strategist John Stoltzfus. report Monday.
Covid cases have rebounded in the United States this month, with the delta variant spreading among the unvaccinated. The United States has averaged nearly 30,000 new cases per day over the past seven days ending Friday, up from a seven-day average of around 11,000 cases per day a month ago, according to data from the U.S. Centers for Disease Control and Prevention. Cases were already exploding all over the world because of the delta variant.
“The market looks poised to take a more defensive character as we experience a significant deceleration in earnings and economic growth,” Mike Wilson, chief US equities strategist at Morgan Stanley, wrote in a note Monday. “The breadth of the market has been deteriorating for months and is just another confirmation of the mid-cycle transition, in our opinion. It usually ends with a correction of the index level of the material (10-20 percent).
Oil prices fell amid fears of slower growth and as OPEC + agreed to start phasing out production cuts. Energy stocks were among the worst performers in pre-market trading, with ConocoPhillips losing more than 3%, Exxon Mobil losing 3%. WTI crude fell 3% to around $ 69.36 a barrel.
A busy earnings week is upon us, with nine Dow components due to be reported on and 76 S&P companies providing quarterly updates. United Airlines and American Airlines will report, as will social media companies Snap and Twitter. CSX, Johnson & Johnson, Coca-Cola, Honeywell, IBM, Intel and Netflix are also on the program.
Inflation fears weighed on stocks last week, with a University of Michigan U.S. Consumer Confidence Index released on Friday showing consumers believe prices will rise 4.8% during the year next. This is the biggest increase since August 2008. Earlier in the week, the consumer price index for June showed that inflation jumped 5.4% year-on-year, scaring investors.
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