If you’ve been keeping an eye on COVID-19’s latest delta variant, you can see the number of cases spiking in certain places where slow vaccination rates and the easing of social distancing and mask mandates are prevalent. The surge in positive cases is now causing a seismic ripple in the stock markets.
According to a CNN report, the Dow Jones on Monday dropped 2.7% (more than 930 points), while the S&P 500 slumped 2.1%, and the Nasdaq dropped 1.6%. Meanwhile, the Wall Street Journal reported that the Stoxx Europe 600 was down 2.3% and Hong Kong’s Hang Seng Index dropped 1.8%.
Why the biggest drop since last October? Investors are concerned that as new COVID-19 cases continue to tick up, the fragile economic recovery—particularly in certain industries—is under threat.
Unsurprisingly, shares of travel companies are tumbling. Major U.S. airlines including American Airlines, Delta Air Lines, and United Airlines dropped more than 4%, while cruise operators that recently scheduled new voyages—such as Carnival, Norwegian, and Royal Caribbean—slid more than 5%. Oil prices are also down more than 3%.
There are some bright spots: Shares in Kroger supermarkets were up, as were those of Etsy, Moderna, and BioNTech (both makers of COVID vaccines).
The markets have been periodically volatile throughout the pandemic, taking big hits particularly in March 2020 at the beginning of lockdowns, when many businesses shuttered. More than a year later, however, analysts continue to note that both the Dow and the S&P 500 are still strong.
In a survey by WSJ, economists estimated that between April through June the economy grew at a 9.1% seasonally adjusted annual rate. “That would mark the second-fastest pace since 1983, exceeded only by last summer’s rapid rebound, when businesses started to reopen after lockdowns and governments began easing pandemic-related restrictions,” the report said.