After rallying to new highs this week, stocks plummeted Thursday morning—sending major indexes to their lowest levels this month—amid mounting concerns over rapidly spreading Covid-19 variants once again shuttering economies.
The Dow Jones Industrial Average plunged about 470 points, or 1.3%, Thursday morning, wiping out two weeks’ worth of gains that pushed the index near record territory
The S&P 500 and tech-heavy Nasdaq, both of which closed at record highs Wednesday, fell 1.2% and 1.5%, respectively, and hit their lowest levels since June.
After rallying to new highs this week, big-tech stocks Apple, Tesla and Microsoft were among firms heading up the market’s losses Thursday, sinking as much as 3% in early trading.
Particularly at risk of variant-spurred lockdowns, automobile and travel stocks were among the hardest hit Thursday morning, with Ford Motor Company, American Airlines and Carnival Cruise Lines falling 3%, 3.5% and 5%, respectively. Meanwhile, Covid-vaccine makers Moderna, Novavax and BioNtech fell up to 5%, while Pfizer and AstraZeneca dipped about 1% apiece.
Global stocks also struggled Thursday: The United Kingdom’s FTSE 100 fell 2%, while Japan’s Nikkei 225 ended the day down 1% after officials declared a coronavirus state of emergency in Tokyo.
Though the market’s recovery during the pandemic has been among the quickest in history, experts have increasingly worried that rapidly spreading variants could once again halt economies. “We should think about the Delta variant as the 2020 version of Covid-19 on steroids,” Andy Slavitt, one of President Joe Biden’s former Covid advisers, told CNN Wednesday. “It’s twice as infectious.” World Health Organization officials on Wednesday warned countries—and particularly those where vaccination is less prevalent—against relaxing their lockdown restrictions too quickly. In the briefing, Maria Van Kerkhove said the world is “not in a good place” as contagious strains, like the delta variant first identified in India, tear through largely unvaccinated nations and continue to mutate. Just this week, the delta variant became the dominant Covid-19 strain in the U.S.
“While stocks have been on a tear and hitting all-time highs, the mood in the markets is starting to sour,” Oanda analyst Sophie Griffiths wrote in a Thursday email. “Concerns over the health of the economic recovery are denting risk sentiment and hitting demand for stocks, while inflation concerns and fears that the Federal Reserve could move to start tightening monetary policy have lingered over the past few weeks.”
“The delta spread is worsening, but this has been the case for a while, and unlike during the earliest stages of the pandemic, a proven solution exists with which to battle the virus: vaccines,” Vital Knowledge Media Founder Adam Crisafulli said early Thursday. “Therefore, we would caution against becoming too concerned about a return to the dark days of last year’s second and third quarters.”
What To Watch For
Sure to shed light on the economic recovery, second-quarter earnings season kicks off next week with big-bank results from JPMorgan and Goldman Sachs on Tuesday.