Wall Street drops more than 1% as wave of viruses raises concerns for recovery

July 19 (Reuters) – Major Wall Street indices fell more than 1% on Monday, with economy-sensitive stocks and travel leading the declines, as a spike in global COVID-19 cases has raised new concerns about slowing economic growth.

New infections have increased in parts of Asia and England, while COVID-19 cases in the United States soared 70% last week, fueled by the Delta variant.

All 11 S&P sectors fell at the start of the session, with so-called value stocks including financials (.SPSY), industrials (.SPLRCI), materials (.SPLRCM) and energy (.SPNY) falling between 1. 8% and 3.7%.

The banking sub-index (.SPXBK) fell 3.3%, following a decline in the benchmark 10-year Treasury yield to its low in mid-February.

“Before the Delta variant started to gain traction, things were forecast for a very strong recovery,” said David Grecsek, general manager of investment strategy and research at Aspiriant in New York.

“What we are seeing today is data or news that is going to upset this kind of calm, low volatility, high corporate earnings scenario, the market is going to react to that.”

The benchmark S&P 500 (.SPX) ended a three-week winning streak on Friday, with only defensive sectors – seen as relatively safe in times of economic uncertainty – registering small gains.

On Monday, the tech-heavy Nasdaq Index (.IXIC) outperformed the wider market as investors again sought safety in growth-linked stocks that led Wall Street to resume its coronavirus lows Last year.

Still, at 9:57 a.m. ET, the Nasdaq was down 1.53%. In comparison, the Dow Jones Industrial Average (.DJI) was down 1.83%, while the S&P 500 (.SPX) was down 1.61%.

The CBOE Volatility Index (.VIX), dubbed the Wall Street fear gauge, hit a two-month high.

Shares of travel-related companies, which had just started to climb after suffering heavy losses in closures due to the pandemic last year, fell again on Monday. The S&P 500 Airlines Index (.SPLRCAIR) fell 5.4%.

Cruise lines Royal Caribbean Group (RCL.N), Carnival Corp (CCL.N) and Norwegian Cruise Line (NCLH.N) fell more than 6%.

After strong quarterly reports from the big banks last week, the focus is now on technology earnings with companies such as IBM (IBM.N), Netflix (NFLX.O), Texas Instruments (TXN.O) and Intel (INTC.O) which is expected to release a report this week.

Analysts on average expect 72% year-on-year growth in earnings per share for S&P 500 companies, according to IBES estimate data from Refinitiv.

U.S.-listed shares of Alibaba Holding, Baidu, and ride-sharing app Didi Global (DIDI.N) fell between 3.6% and 6.6% amid renewed fears of anti -monopoly against big technology companies.

Zoom Video Communications Inc (ZM.O) slipped 4.3% after the teleconferencing service provider announced a $ 14.7 billion stock deal to buy the call center operator based on the cloud Five9 Inc (FIVN.O).

Five9 shares jumped 3.6%.

Falling issues outnumbered the 8.80 to 1 advances on the NYSE and 6.48 to 1 on the Nasdaq.

The S&P Index recorded eight new 52-week highs and no new lows, while the Nasdaq recorded nine new highs and 189 new lows.

Report by Devik Jain in Bangalore; Editing by Maju Samuel

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