By Geoffrey Smith
Investing.com -- U.S. stock markets fell sharply at the open on Monday, as a surge in Covid-19 cases across the U.S. and further afield drove a wave of risk aversion that hit most asset classes.
By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was down 458 points, or 1.3%, at 34,229 points. The S&P 500 and the Nasdaq Composite were both down 1.2%, pulling away sharply from the record highs they had hit last week.
The move came after a weekend of ill-tempered exchanges between the Biden administration and social media giants, which illustrated the mounting concern in Washington about the spread of the Delta variant of Covid-19, a strain more than twice as contagious as earlier iterations of the virus. Infection rates are rising particularly strongly in the South and Midwest, where skepticism toward vaccines - and to most policies advanced by the Democratic administration - is highest. The number of new cases across the U.S. hit its highest single-day level in over two months last week.
Ironically, Facebook (NASDAQ:FB) stock outperformed the general rout, despite being singled out for criticism by administration officials up to and including President Joe Biden for allowing the spread of misinformation about vaccination on their networks. Facebook was down 1.4%.
Oil stocks were among the biggest losers, as fears that the economic recovery will lose momentum and kill demand combined with news of an end to OPEC's internal quarrel over production quotas at the weekend, paving the way for some 2 million barrels a day of supply to be restored to world markets by the end of the year.
Occidental Petroleum (NYSE:OXY) stock fell 6.5%, while Exxon Mobil (NYSE:XOM) stock fell 3.2% and Chevron (NYSE:CVX) stock fell 3.0%, as U.S. crude futures tumbled below $70 a barrel for the first time in over a month.
Broader reopening plays also reversed sharply, with AMC Entertainment (NYSE:AMC) stock falling over 10%, Carnival (NYSE:CCL) stock and Norwegian Cruise Line (NYSE:NCLH) stock falling over 6% each, and major airline stocks falling by between 4% and 7%. Financials were also hit as bond yields fell to their lowest in some five months, threatening to put fresh pressure on their lending margins. The yield on the United States 10-Year Treasury fell to its lowest since February at 1.21%. Wells Fargo (NYSE:WFC) stock, Citigroup (NYSE:C) stock, Goldman Sachs (NYSE:GS) stock and Bank of America (NYSE:BAC) stock all fell over 3%.
Zoom Video (NASDAQ:ZM) stock couldn't escape the general selling despite agreeing a merger that pre-empts what some analysts had identified as a serious threat to its further growth. The videoconferencing company said at the weekend it would buy Cloud-based call center operator Five9 Inc (NASDAQ:FIVN) for some $15 billion in an all-stock deal. Zoom stock fell 4.3%, while Five9 stock rose 3.5%.
Among the few other stocks to stay in the green were vaccine-maker Moderna (NASDAQ:MRNA) which rose 3.5%, and defensive consumer plays Procter & Gamble (NYSE:PG) and Walmart (NYSE:WMT).