Stock futures rose in overnight trading on Monday after concerns about the spread of the Delta variant of Covid-19 led investors to dump stocks, especially those directly affected by pandemic restrictions.
Futures on the Dow Jones Industrial Average rebounded 80 points. S&P 500 futures gained 0.3% and Nasdaq 100 futures traded 0.4% higher.
Wall Street suffered a sharp sell-off during regular trading hours as investors feared the fast-spreading delta coronavirus variant could hinder economic recovery. The blue-chip Dow plunged more than 700 points and had its worst day since October, while the S&P 500 lost 1.6% and the Nasdaq Composite lost about 1.1%.
“Fears of stagflation will be of great concern to investors if a resurgence of COVID infections slows the economy while consumer prices continue to rise,” said Peter Essele, head of investment management at Commonwealth Financial Network.
In the USA, new Covid cases are recovering, as the delta variant is spreading mainly among the unvaccinated. According to CDC data, there are an average of about 26,000 daily cases in the US for the past seven days, more than double the average from a month ago.
Stocks directly tied to a successful reopening, such as airlines and cruise lines, took the brunt of the sell-off. Carnival and Norwegian Cruise Line each fell more than 5%, while Royal Caribbean was down 4%. United Airlines shares lost 5.5%.
The classic cyclical sectors of energy and finance were the biggest losers, down 3.6% and 2.8% respectively. The US 10-year Treasury yield fell 12 basis points to 1.17%, its lowest level since February, adding to fears of an economic slowdown.
Still, even after Monday’s decline, the S&P 500 is only 3.1% below its record hit last week. While the stock benchmark fell below its 50-day moving average during Monday’s defeat, it eventually closed above this important technical level, giving some hope to investors looking for a rebound.
“Many of the cyclical companies are selling out of fears that Covid will stop the recovery,” said Chris Zaccarelli, CIO at Independent Advisor Alliance. “We do not believe this is the case and are ready to let the sell-off take its course and buy the slump believing that the economy will fully recover and return to its previous growth trajectory, which is what most cyclical companies do in the country brings. ” the airline, travel and leisure industries along with it. “
IBM shares rose 3% in expanded trading on Monday after the enterprise technology and services provider released second quarter results that exceeded expectations and showed the strongest sales growth in three years.