The S&P 500 slumped Monday, led by a rout in energy and financials as investors grew concerned over the global recovery following a surge infections brought on by the Delta variant.
The S&P 500 fell 1.6%, the Nasdaq was down 1.1%. and the Dow Jones Industrial Average fell 2.1%, or 726 points, though was down 953 points at the lows of the day.
"A plethora of macro uncertainty is now in investor crosshairs including pandemic / variant spread; reflation / inflation; future of CB policy; earnings; and geopolitical tensions (watch the ongoing escalation between U.S. & allies against China)," Mark Luschini, chief Investment strategist at Janney Montgomery Scott said in a note.
New coronavirus cases climbed in all 50 states on Sunday for the fourth day in a row on a rolling seven-day average, a rise not seen since the spring 2020 surge, Stifel said, citing Johns Hopkins University data. The spike in the US follows rising infections globally including in the UK.
"The Delta variant of the coronavirus has now spread to more than a hundred countries. The way it is spreading, it will soon become the most dominant strain globally," Dr. Poonam Khetrapal Singh, regional director of the World Health Organization - South-East Asia said. The Delta variant has reportedly reached the UK, US, Singapore and many other nations."
This backdrop of worries has muddied the outlook for growth, prompting a sharp decline in Treasury yields, and pressuring cyclical stocks including financials and energy.
Energy fell more than 3% as U.S. oil prices dropped 7.5% below $70 level after OPEC and its allies agreed to lift output at time when the delta Covid variant casts doubt on global demand.
The fears on Wall street underscored by a jump in the VIX – or so-called fear index - to a two-month high.
Financials, meanwhile, were pressured by a the fall in U.S. bonds yields, with the 10-year Treasury diving below 1.2% to hit fresh February lows.
JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) were in the red.
Lower interest rates hurt banks' net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to their lenders.
Megacap tech was no exception to the selloff, though fared somewhat better relative to beaten down cyclical stocks.
Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT, Amazon.com (NASDAQ:AMZN) were more than 1% lower.
A sea of red also washed over travel-related stocks, with airlines and cruise stocks sharply lower amid fears rising infections threaten travel demand.
United Airlines Holdings (NASDAQ:UAL), American Airlines (NASDAQ:AAL), Boeing (NYSE:BA) were hit hard, with the latter down more than 5%. While Carnival (NYSE:CCL) slumped 6%.
Fears that some restrictions could return, however, proved a boon for the stay-at-home stocks.
Teladoc Inc (NYSE:TDOC) was up 3%, while Peloton (NASDAQ:PTON) and DoorDash (NYSE:DASH) rose 7% and 5%. Zoom Video Communications (NASDAQ:ZM) proved an exception, however, falling about 2% after buying cloud contact center software Five9 in an all-stock transaction that valued the company at $14.7 billion.