US STOCKS-Dow drops 2% as wave of viruses stifles hopes of recovery


(For a live Reuters blog on the US, UK and EU stock markets, click LIVE / or type LIVE / in a news window)

* Spike in virus cases hits travel, inventory related to recovery

* Five9 jumps on Zoom’s $ 14.7 billion buyout deal

* Index slide: Dow 2.35%, S&P 1.72%, Nasdaq 1.14% (add comment, details; updates early afternoon)

July 19 (Reuters) – The Dow Jones fell more than 2% on Monday as investors sold economy-sensitive stocks and travel stocks and sought the perceived safety of bonds over fears that a spike in cases COVID-19 will derail a broader economic recovery.

New infections have increased in parts of Asia and England, while COVID-19 cases in the United States soared 70% last week, fueled by the Delta variant.

All 11 S&P sectors fell, with so-called value stocks, including financials, industrials, materials and energy, falling between 2.0% and 3.9%.

The banking sub-index fell 3%, following a decline in the benchmark 10-year Treasury yield to its low in mid-February.

“Investors are concerned that the Delta variant will reset the clock in terms of the progress we’ve made with COVID-19 and the economy recovering,” said Andre Bakhos, managing director of New Vines Capital LLC in New Jersey .

The benchmark S&P 500 ended a three-week winning streak on Friday with only defensive sectors, seen as relatively safe in times of economic uncertainty, registering small gains.

On Monday, the tech-rich Nasdaq Index outperformed the broader market as investors again flocked to growth-related stocks that led Wall Street to recover from its coronavirus lows last year .

“It’s a way for investors to hedge the risk of COVID-19,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, California.

“We know that tech stocks will tend to do better when there is less stability, because they are less responsive to consumers who increase their spending on services and exit.”

Still, at 12:07 a.m. ET, the Nasdaq Composite was down 1.14%.

By comparison, the Dow Jones Industrial Average lost 815.67 points, or 2.35%, and was on track for its worst session since October 2020, while the S&P 500 slipped 1.72% and was pegged. for its largest single-day percentage drop since May.

Small caps and economically sensitive transportation fell 0.7% and 1.6% respectively.

The CBOE volatility index, dubbed the Wall Street fear gauge, hit a two-month high.

Shares of travel-related companies, which had just started to climb after suffering heavy losses in closures due to the pandemic last year, fell again on Monday. The S&P 500 Airlines sub-index fell 2.9%.

Cruise lines Royal Caribbean Group, Carnival Corp and Norwegian Cruise Line fell more than 2.9%.

After strong quarterly reports from the big banks last week, the focus is now on tech earnings with companies like IBM, Netflix, Texas Instruments and Intel expected to release their report this week.

U.S.-listed shares of Alibaba Holding, Baidu, and ride-sharing app Didi Global fell 2.3% to 7.3% amid renewed fears of anti-monopoly action against large technology companies.

Zoom Video Communications Inc fell 4.2% after the teleconferencing service provider announced a $ 14.7 billion stock deal to buy cloud-based call center operator Five9 Inc.

Five9 shares jumped 5%.

Falling issues outnumbered the 5.37 to 1 advances on the NYSE and 2.29 to 1 on the Nasdaq.

The S&P Index recorded 12 new 52-week highs and no new lows, while the Nasdaq recorded 17 new highs and 231 new lows.

Report by Devik Jain in Bangalore; Editing by Sagarika Jaisinghani and Shounak Dasgupta

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