Rising COVID-19 Cases Cause Concern for Investors

Dow Jones Industrial Average Declines

Stocks in the US plummeted Monday amid concerns that an increase in the number of new COVID-19 cases could hurt economic recovery and slow global growth. As of midday trading the Dow Jones Industrial Average was heading toward its largest decline in 2021.

The Dow finished Monday’s trading session down 726 points or 2%. Meanwhile the Nasdaq lost 1% for the day and the S&P 500 was down 1.6%. Adding to concerns about a slowing economy, the 10-year Treasury yield fell to a new five-month low.

Travel, Recovery Stocks Selloff

Since the start of July, the number of COVID-19 cases has been rising among people who are not vaccinated as the Delta variant of the virus spreads. The US is averaging close to 30,000 new cases per day as of Friday. That is up from a seven-day average of about 11,000 cases per day last month.

Some investors are worried that more shutdowns and restrictions could be coming. Airline stocks including Delta Air Lines (DAL), United Airlines (UAL), and American Airlines (AAL) were under pressure as were cruise lines and other travel companies. Boeing (BA), General Motors (GM), and Caterpillar (CAT), all considered recovery plays, were also lower as a result of the rising case numbers.

Still Reasons to be Optimistic

Oil stocks took a significant hit in Monday’s selloff as prices for oil fell amid fears about a slowing economy. It did not help that OPEC+ agreed to start phasing out cuts to production. ConocoPhillips (COP) and ExxonMobil (XOM) were among the oil stocks to take a hit. Bank and tech stocks also suffered from the broad-based selloff.

Despite the declines Monday, many investors, including billionaire Bill Ackman, are not concerned about the impact of rising COVID-19 cases on economic growth. They argue the Delta variant could motivate more people to get vaccinated. It will be interesting to see if bulls or bears win out during what will likely be a volatile week on Wall Street.

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