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Investors flee stocks, pile into bonds as COVID-19 surges; oil plunges

Stock MarketsJul 19, 2021 05:37PM ET
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2/2 © Reuters. FILE PHOTO: An investor looks at an electronic board showing stock information at a brokerage house in Beijing, August 27, 2015. REUTERS/Jason Lee/File Photo 2/2

By Jessica DiNapoli

NEW YORK (Reuters) -Stocks on Wall Street fell as much as 2% on Monday, with the Dow posting its worst day in nine months, as a rise in worldwide coronavirus cases and increasing U.S. deaths drove investors out of risky assets, crushing bond yields and share prices.

Oil prices plunged more than 6%, driven down both by worries about future demand and by an OPEC+ agreement to increase supply.

U.S. Treasury bond yields tumbled to five-month lows, with the yield on benchmark 10-year notes sinking 12.2 basis points to 1.177%, close to the session's low of 1.176%, a level last seen in February.

All three major U.S. stock indexes ended trading sharply lower, with the S&P and the Nasdaq suffering their largest one-day percentage falls since mid-May.

Rising COVID-19 cases, spurred by the Delta variant, fueled fears of a resurgence, with the average number of infections per day tripling in the past 30 days in the United States, according to an analysis of Reuters data.

Deaths, which can lag weeks behind a rise in cases, rose 25% last week from the previous seven days with an average of 250 people dying a day.

"The markets suffered a summer swoon today with COVID fears again at the forefront of investors' minds," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

"Despite the negative tone weighing on markets, we remain optimistic that the economy is on a strong footing and, although the path will be uneven, the trend is still toward increasing growth and higher corporate profits."

The Dow Jones Industrial Average fell 725.81 points, or 2.09%, to 33,962.04, the S&P 500 lost 68.67 points, or 1.59%, to 4,258.49 and the Nasdaq Composite dropped 152.25 points, or 1.06%, to 14,274.98.

MSCI's gauge of stocks across the globe shed 1.63%.

Investors are also worried about the specter of elevated inflation, which the market has long feared.

U.S. President Joe Biden on Monday acknowledged that prices for some items such as vehicles have increased but said that his administration would remain vigilant over inflation and the havoc it could wreak on the economy.

"Fear of stagflation will be a major concern for investors if a resurgence in COVID infections causes economies to slow while consumer prices continue an upward trajectory," said Peter Essele, head of investment management for Commonwealth Financial Network, in an e-mailed statement.

COVID-19 outbreaks are occurring in parts of the country with low vaccination rates. About one in five new cases is in Florida, and the vast majority of people hospitalized for COVID are unvaccinated.

"The big concern for the market is whether we are going to see a slowdown in the global economic recovery, and this could be the overriding force which results in a bad period for equities in the weeks ahead," said Russ Mould, investment director at brokerage AJ Bell.

Travel and leisure stocks sank, with the S&P 1500 Airline index shedding 3.8% and the S&P 1500 Hotel and Restaurant index off 2.7%.

The greenback climbed to a more than three-month peak against a basket of major currencies. But the dollar is off highs as the yen and Swiss franc advanced with the decline in risk appetite.

FOREVER CHANGED?

Oil prices fell as OPEC+ agreed to boost output, causing concerns about a crude surplus if an economic slowdown comes to pass. The decline was the largest since late March.[O/R]

U.S. crude recently fell 7.39% to $66.50 per barrel and Brent was at $68.65, down 6.71% on the day.

Economists at Bank of America (NYSE:BAC) downgraded their forecast for U.S. economic growth this year to 6.5%, from 7% previously.

"Despite rising vaccination rates, a return to pre-Corona normality seems questionable," Ulrich Leuchtmann, head of FX and commodity research at Commerzbank (DE:CBKG), wrote in a research note.

Investors flee stocks, pile into bonds as COVID-19 surges; oil plunges
 

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Comments (22)
Jim Orth
Jim Orth Jul 20, 2021 12:02AM ET
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First we were told that when vaccinated we wouldn't get Covid.Now they are telling us after being vaccinated we won't die from it. Nothing but lies upon lies.
Ron Love
Ron Love Jul 19, 2021 3:36PM ET
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I swear half the planet lives on max panic and fear most their lives.
Dave Jones
Dave Jones Jul 19, 2021 3:18PM ET
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just imagine how much worse it would be if the vaccines didn't work....yeah right
James Vandervest
James Vandervest Jul 19, 2021 2:01PM ET
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Wait until the truth about the vaccines is more widely accepted.. crash city.
Christian Gustafson
Christian Gustafson Jul 19, 2021 1:07PM ET
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Just wait until the market figures out that Biden is not POTUS.
tim banks
tim banks Jul 19, 2021 1:07PM ET
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so would it go up or down then. luckily biden is president of the moon for stocks.
Christian Gustafson
Christian Gustafson Jul 19, 2021 1:07PM ET
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tim banks  Market would implode, Constitutional crisis.  Undeclared state of war with nations involved in the fraud.
Whaling Trawler
Whaling Trawler Jul 19, 2021 11:31AM ET
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Being a writer and reporter of news these days is for total losers
Junior Moreno
Junior Moreno Jul 19, 2021 10:56AM ET
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Every time the CBOE SKEW index hit 138, the SP500 dropped 10% soon after. Whenever it hit 157, the SP500 dropped 20% immediately. On June 25, the SKEW hit a record 170, which proportionally indicates an immediate drop of the SP500 by more than 28%. More: In July 2020, Fitch Ratings had already signaled a downgrade of the US rating due to its growing deficit. In 2011, when the US lost its AAA rating, the SP500 dropped 20%. In addition, the S&P 500 Shiller CAPE Ratio also hit a record high of 38.00 (a value only seen during the 2000 .com bubble crash) Most of the time when the Shiller exceeds > 30, the SP500 immediately drops with heavy violence. Gold also dropped suddenly more than 7% in June, no doubt because the big hedge funds, already anticipating the catastrophic collapse ahead, made cash by selling gold. With that cash on hand, they can buy the imminent collapse of the SP500. I expect until the end of July a rapid and violent drop in the SP500 of more than 40% in a few days.
Tommy Rommazontz
Tommy Rommazontz Jul 19, 2021 10:56AM ET
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The money printers are blasting away. That is asset inflationary. unlike we will see anymore than a healthy 7% correction.
trevor hron
trevor hron Jul 19, 2021 10:56AM ET
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I think wee see the 40% drop as well. Market is overvalued by 50%. If earnings go down anymore and inflation goes up then market will be over valued by almost 60%. Leading to one of the biggest stock market draw down’s in history.
trevor hron
trevor hron Jul 19, 2021 10:56AM ET
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Tommy Rommazontz I think the markets way over priced. With a 38 PE it makes it the most expensive market in history. That’s with the inflated earnings. True PE is well over 40 probably gaining in 50x earnings. Which is ridiculously high
taylor jason
taylor jason Jul 19, 2021 10:25AM ET
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lol headline says "stocks on worst run in 18 months" indices are barely 5% down from most recent high, hardly thr worst "strerch" in 18 months since there were three corrections since the 2020 sell off
ZS Beck
ZS Beck Jul 19, 2021 9:00AM ET
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It’s time to make the vaccine mandatory Soon or later it will be. No matter what.There is no way to let another economy choke down or shut down happening because some of us without any explanation doesn't want to get the vaccine and finance health care cost forever when you end up in the hospital.
Tyrone Jackson
Tyrone Jackson Jul 19, 2021 9:00AM ET
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Get a grip
Jm Vm
Jm Vm Jul 19, 2021 9:00AM ET
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Forget it. Let the deniers breathe deeply. The rest of us can wear a mask or get vaccinated. Allow the virus to do it's work cleaning up. It might be the only good that comes from the pandemic.
Whaling Trawler
Whaling Trawler Jul 19, 2021 8:58AM ET
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The vaccine is a cheap and easy way for them to accomplish their goal if reducing the world's population to 500 million.
Vishal Swastik
Vishal Swastik Jul 19, 2021 8:58AM ET
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500MN....are you joking??
Jenn foster
Jenn foster Jul 19, 2021 8:58AM ET
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stupid comment
James Vandervest
James Vandervest Jul 19, 2021 8:58AM ET
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Exactly. Literally it is the stated goal. They even put it in stone. They think people are stupid. I'm beginning to agree with them..
trevor hron
trevor hron Jul 19, 2021 8:58AM ET
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Couldn’t have said it better. I think that is their likely outcome.
Steve Austin
Steve Austin Jul 19, 2021 8:47AM ET
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who cares if the non vaccinated Republicans die.
Tyrone Jackson
Tyrone Jackson Jul 19, 2021 8:47AM ET
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But the #’s show that the most un vaccinated are inner city blacks and Mexicans. You know, Democratic voters. Out here at the country club, we all are vaccinated and watching our S and P puts make us thousands today Lmao
Dave Jones
Dave Jones Jul 19, 2021 7:30AM ET
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lucky those vaccines really did a great job...
brett fry
brett fry Jul 19, 2021 7:30AM ET
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Yes they clearly show those who are interested in living. Theres no vaccine yet for stupidity
Eudon Hickey
Eudon Hickey Jul 19, 2021 2:40AM ET
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I bet you markets dip because of the USA Election truth coming out now, people see the democrats cheated
Steve Austin
Steve Austin Jul 19, 2021 2:40AM ET
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you must have been dropped as a baby.
divad mocihc
9divaD Jul 19, 2021 1:40AM ET
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Are they selling sinovac on amazon yet?
David David
David9 Jul 19, 2021 12:21AM ET
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get ready.... economic turmoil coming...
Arub Baji
Arub Baji Jul 19, 2021 12:16AM ET
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Price of sushi going UP!  buy now.  Save for later.
Joseph Vogt
Joseph Vogt Jul 18, 2021 11:16PM ET
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The crash that occurred in 2008 will not happen the same way again. One crisis that not many people see is that home building is at a low , and for every foreclosed property their are 100 banks/investment groups that buy them and will never sell. You'll own nothing and you'll be happy , remember that?
Anthony Cloud
Anthony Cloud Jul 18, 2021 11:16PM ET
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They never happen in the same way, but they do happen again.
William Smith
William Smith Jul 18, 2021 11:09PM ET
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Inflation worries is about all I read about. Meanwhile gold continues to head lower as do interest rates. Seems a money printing induced depression is most likely.
zen cool
zen cool Jul 18, 2021 11:01PM ET
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99%survival rate, enough of this posted every double week
Miriam Morkhul
Miriam Morkhul Jul 18, 2021 11:01PM ET
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99.97%
Stephen Fa
Stephen Fa Jul 18, 2021 11:01PM ET
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Helps cool the financial bubble.
brett fry
brett fry Jul 18, 2021 11:01PM ET
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You forgot to include 25% long term complications. Also you need to update your stats with Delta data.
Stan Smith
Stan Smith Jul 18, 2021 10:23PM ET
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BIS Offers Dire Economic Warning...Inflation isn't going anyway soon.
trevor hron
trevor hron Jul 18, 2021 10:23PM ET
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It sure isn’t. I think we’re going to see an ugly currency situation. Inflation will be extremely high and getting higher throughout the year.
Elvis Durant
Elvis Durant Jul 18, 2021 10:11PM ET
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Here we go again with fake news
Jouni Matero
Jouni Jul 18, 2021 10:11PM ET
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Let me guess, it's a scam either by democrats or republicans? Just like anything what happens.
Ronald Warren
Ronald Warren Jul 18, 2021 9:34PM ET
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Where was the fear of inflation 10 months ago, when the cost of lumber went up 400%. The ridiculous fiasco of printing infinite cash is running inflation to the moon. All the FED can do is keep printing money, so there's enough in circulation to pay higher prices. I know I'm just being sarcastic, but the situation is dire. The bubble that burst in 2008 was 30 trillion. The current bubble is 100 trillion. What on earth is getting ready to hit us? Good luck All!!
Show previous replies (2)
OVER CULL
OVER CULL Jul 18, 2021 9:34PM ET
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Sol Wein gold and silver aren’t gonna help you.
Michael Dell
Michael Dell Jul 18, 2021 9:34PM ET
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OVER CULL Gold helped those who bought it after the dot com bubble burst when it was $300 and now its $1800+
Michael Dell
Michael Dell Jul 18, 2021 9:34PM ET
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OVER CULL Gold helped those who bought it after the dot com bubble burst when it was $300 and now its $1800+ and going much higher in the next 3 years
Evgeny Sergeev
Evgeny Sergeev Jul 18, 2021 9:34PM ET
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Michael Dell can you say the same anout AMZN? $8 to $3600
Tyrone Jackson
Tyrone Jackson Jul 18, 2021 9:34PM ET
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Paid half for my stack than what it’s worth now That my friends is a inflation hedge.
 
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