Dow Soars 550 Points: Stocks Pare Back Massive Losses Despite Ongoing ‘Covid Anxiety’
Major stock market indexes on Tuesday recovered from a massive selloff with much of the same fervor that’s bolstered stocks to new highs this year, largely eschewing investor concerns that the rapidly spreading Delta variant of the virus could hurt economic activity.
After plunging 2.1% and 1.6%, respectively, the Dow Jones Industrial Average and S&P 500 climbed 550 points and 65 points, or 1.5% and 1.6%, respectively, putting them both about 1% off their all-time closing highs on July 12.
Erasing a 1.1% Monday loss, the tech-heavy Nasdaq jumped 1.6%, boosted once again by biotechnology stocks, including top-performers Neurobo Pharmaceuticals, Immunome and Illumina, which climbed 40%, 10% and 4%, respectively.
Travel and leisure stocks, which led the market’s Monday decline, also bounced back, with Carnival Corp., American Airlines and Norwegian Cruise Lines climbing about 8% each after falling as much as 6%.
Despite the market’s renewed confidence, a trio of big industrial companies—appliance maker Electrolux, paint-supplier PPG and auto manufacturer Volvo—fell as much as 5%, following worse-than-expected earnings as a result of intensifying supply chain issues.
Electrolux CEO Jonas Samuelson says the company expects “significant regional” disparities for the rest of the year and warned that industry-wide “supply challenges” should remain “for an extended period of time.”
In another sign of market pessimism, the cryptocurrency market lost about $100 billion in overnight trading, pushing the price of bitcoin down 6% to less than $30,000, where it hovered through market close.
“Stocks are experiencing an extremely strong rebound after the Monday slump, with cyclicals, which have been deeply oversold and suffer from extraordinarily negative sentiment, witnessing sharp rallies—especially banks and transportation stocks,” Vital Knowledge Media founder Adam Crisafulli said Monday, noting the U.S.’ warning against travel to the U.K. and Indonesia and Canada’s plans to lift travel restrictions on vaccinated Americans as examples of both good and bad news. “For now, there hasn’t been a noticeable impact to economic activity as a result of the Covid resurgence, but this is by far the biggest risk facing stocks.”
Stocks posted one of their worst days this year on Monday after a slew of weekend developments put investors on edge about the pandemic’s resurgence. Rochelle Walensky, the director of the Centers for Disease Control and Prevention, said Friday some municipalities should consider imposing mask mandates and warned the rapidly spreading Delta variant is causing a “pandemic of the unvaccinated.” Meanwhile, cities like Las Vegas and Los Angeles have already started tightening their Covid-19 guidelines, fueling concerns that state and local governments may once again impose partial lockdowns. “Investors are facing the very real prospect that limitations on daily life could be a factor affecting markets and [corporations] even into 2022, which is a far cry from the hopes many had at the start of this year when the vaccine rollout began,” a team of Deutsche Bank strategists led by Jim Reid wrote in a Tuesday note.
140 million. That’s about how many Americans, roughly 44% of the nation’s population, have yet to receive a single Covid-19 vaccine dose. On Sunday, Dr. Scott Gottlieb, a former head of the Food and Drug Administration, warned the Delta variant will “likely” infect a majority of unvaccinated Americans.
Stock Market Sell-Off: Dow Plunges 700 Points In Worst Drop Since October As Delta Variant Fears Mount (Forbes)
Former FDA Head Says Delta Will Infect ‘Majority’ Of Unvaccinated Americans—And May Be ‘Most Serious Virus’ In Their Lifetime (Forbes)
Bitcoin Plummets Below $30,000 As Crypto Market Crashes Amid Delta Variant Spread (Forbes)