Dow plummets 726 points for worst day of 2021 as virus variants threaten global recovery

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US stocks cratered on Monday as investors eyed a spike in global COVID-19 cases led by the Delta variant, throwing up a roadblock to a full recovery of the economy.

The Dow Jones industrial average fell 726 points, or about 2.1%, for its worst day since October 2020, while the benchmark S&P 500 and tech-heavy Nasdaq Composite also tumbled.

The yield on the 10-year Treasury note declined as much as 12.2 basis points to 1.177%, its lowest level since February as investors flocked to safe-haven assets.

Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:

Read more: ‘More weakening beneath the surface’: A Wall Street strategist who warned investors before last year’s 35% crash lays out the latest signs that another slump into a bear market is looming

“COVID has returned to the front burner of investor concerns right now,” David Donabedian, CIO of CIBC Private Wealth, said in a note. “Last week we had high inflation readings. Now we have concerns that the rise in COVID cases is dimming the economic outlook. While the second-quarter earnings reports have so far beat expectations, this is old news now.”

Shares of airlines, cruise operators, and other travel companies slumped on concerns that the Delta variant would derail the recovery.

American Airlines and airplane maker Boeing all slipped roughly 5% each. Expedia Group and hotel chain Marriott both declined by roughly 3% each. Meanwhile, Carnival, Norwegian Cruise Line Holdings, and Royal Caribbean Cruises all fell as well.

Energy stocks tumbled, including Texas-based oil equipment maker NOV and Diamondback Energy.

Some argue the plunge on Monday is nothing to fear. The sell-off in stocks is a “healthy pullback” that will likely be short-lived and could present a buying opportunity, said technical analyst Katie Stockton of Fairlead Strategies.

In cryptocurrencies, bitcoin continued its recent slide, falling as much as 3.4% to $30,646.90. All other major cryptocurrencies – ether, cardano, ripple, dogecoin, polkadot, and solana – traded lower on Monday.

Despite the downturn, mining bitcoin has been a lot easier. The asset’s “network difficulty,” which measures how much computing power is needed to mint a new bitcoin, has plummeted.

Oil fell on news over the weekend that OPEC+ reached a deal on supply, overcoming the deadlock between Saudi Arabia and the UAE.

West Texas Intermediate crude fell as much as 8.06%, to $66.02 per barrel. Brent crude, oil’s international benchmark, dropped 7.39%, to $68.15 per barrel, at intraday lows.

Gold fell as much as 0.45%, to $1,807.56 per ounce.

Lumber gained modestly, rising 4.83% to $561.90 as supply catches up with demand. Prices are set to stay elevated despite recent declines, according to an economist,

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US stocks trade mixed as Powell reiterates in testimony that inflation will pass

Stock Market Bubble
A trader blows bubble gum during the opening bell at the New York Stock Exchange (NYSE) on August 1, 2019, in New York City.

US stocks rallied on Wednesday after Federal Reserve Chairman Jerome Powell reiterated that inflation will pass.

The benchmark S&P 500 index scaled close to all-time highs, while the Dow Jones Industrial Average also inched up. The Nasdaq composite fell slightly.

The yield on the US 10-year Treasury slipped 6.1 basis points to 1.353%.

The Fed chief said the US economic recovery still has further to go before the central bank considers tapering its asset purchases, according to prepared remarks ahead of his House Financial Services Committee testimony.

Powell said the US job market “is still a ways off” from the progress the Fed hopes to achieve, suggesting it would stick to its highly accommodative monetary policy even in the face of data showing inflation is on the rise.

Powell on Wednesday presented the central bank’s semiannual monetary policy report to Congress and took questions from lawmakers.

Here’s where US indexes stood at the 4 p.m. close on Wednesday:

Stocks have scaled to record highs in the past weeks as economic data continuously point to a strong recovery on top of robust corporate earnings.

Bank earnings continued Wednesday with Bank of America reporting revenue that fell short of Wall Street’s forecasts but blew past net income predictions.

Citigroup meanwhile posted earnings that came in above analyst estimates as the banking giant’s stock trading offset a miss in fixed income.

Big movers include Oatly, which fell 6.1% to an all-time low of $19.40 after short seller Spruce Point Capital Management accused the oat milk company of misleading investors on multiple fronts and overstating its revenue.

Peloton shares also dipped by 5.4% to $113.33 following a rating downgrade to neutral at Wedbush.

In cryptocurrencies, bitcoin, dogecoin, and cardano’s ada token hit their lowest price in three weeks before recovering slightly. Ether touched a two-week low.

Powell in his testimony challenged the need for cryptocurrencies if the central bank were to issue its own digital currency.

“You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies, if you had a digital US currency,” the Fed chief said.

Oil prices slid after Saudi Arabia and the United Arab Emirates reached a compromise allowing the latter to boost its output, Reuters reported.

West Texas Intermediate crude slipped 3.20%, to $72.84 oil per barrel. Brent crude, oil’s international benchmark, fell 2.56%, to $74.53 barrel.

Gold edged higher for the second straight session, rising 1.08% to $1,825.56 per ounce.

Lumber continued its five-day slide to at $642 per thousand board feet.

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S&P 500 hovers near record highs on continued economic optimism and Fed support

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US stock market investors are feeling optimistic about the economy.

  • US stocks rose with the S&P 500 hovering near record highs Friday as investors remain optimistic about the US economy.
  • The benchmark index on Thursday broke both its intraday and closing records.
  • The 10-year Treasury yield was around 1.455% Friday, in a sign that the market believes strong inflation will prove transitory
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US stocks rose on Friday, with the S&P 500 hovering near record highs as investors continue to remain optimistic about the US economy amid support from the Federal Reserve.

The benchmark index on Thursday broke both its intraday record and closing record, to finish the session at 4,239.18.

Tom Lee, managing partner and the head of research at Fundstrat Global Advisors, said the breakout to new highs was presaged by the upside breakout last week.

“Our base case of a surge in S&P 500 to 4,400 before mid-year 2021 remains intact,” Lee said in a note.

While Thursday’s data showed that US inflation surged more than expected in May, weekly jobless claims fell to a pandemic-era low.

The 10-year Treasury yield was trading around 1.455%, two basis points above its March low, in a sign that the market believes strong inflation will prove transitory, as the Federal Reserve has stated.

Here’s where US indexes stood at 9:30 a.m. open on Friday:

Bitcoin was trading at $37,421. The world’s most popular cryptocurrency climbed to a one-week high Thursday, hitting $38,000 as the cryptocurrency shrugged off renewed calls for tighter regulation.

Gold slipped by 0.57% to 1,887.18 per ounce. The precious metal lost some ground as the US dollar rose.

Oil prices fell. West Texas Intermediate crude edged lower by 0.07% to $70.24 per barrel. Brent crude, oil’s international benchmark, was down 0.07%, at $72.47 per barrel.

The International Energy Agency said on Friday that global oil demand is set to return to pre-pandemic levels by the end of 2022, but renewed COVID outbreaks and low vaccination levels in developing countries will make the recovery uneven.

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US stocks rise after jobs data shows labor market strengthening after disappointing April report

Stock trader
Peter Tuchman, right, works among fellow traders at a post on the floor of the New York Stock Exchange, Wednesday, March 4, 2020.

  • US stocks rose Friday on the latest jobs data that indicate a strengthening labor market, though at a slower pace than analysts were predicting.
  • “The economy is still far from showing substantial progress with the labor market recovery,” an analyst said.
  • The 10-year US Treasury yields slightly fell to 1.604% compared with Thursday’s 1.624%.
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US stocks rose Friday as investors cheered May jobs data that indicated a strengthening labor market after a disappointing April reading.

Non-farm payrolls showed the US economy added 559,000 jobs in May, the Bureau of Labor Statistics said Friday. However, that was slightly lower than the 674,000 median estimate economists surveyed by Bloomberg were predicting.

“The May nonfarm payroll report showed that the economy is still far from showing substantial progress with the labor market recovery,” Ed Moya, senior market analyst at Oanda, said in a note.

He continued: “Labor market hiring remains modest at best and this should support a complete labor market recovery for the Fed at some point between the end of 2022 and early 2023.”

The reading shows a sharp acceleration from April’s dismal report, which saw job growth land well below economist forecasts. The May increase marks a fifth straight month of job additions.

In the bond market, the 10-year US Treasury yields slightly fell to 1.604% compared with Thursday’s 1.624%.

US stocks closed mostly lower Thursday as investors mulled over a new report that President Joe Biden may be open to a lower tax hike for corporations. Mega-cap tech stocks led losses, with Apple, Google, Facebook, and Amazon all down at least 1% Thursday. Tesla fell as much as 5%.

Here’s where US indexes stood at the 9:30 a.m. ET open on Friday:

AMC Entertainment has asked shareholders to let it issue another 25 million shares in the wake of the stock’s 2,300% rally, saying it will fortify the movie-theater chain with the means to chase acquisitions “hard” and turn itself around. The company CEO Adam Aron revealed this in a YouTube interview with Trey’s Trades Thursday night.

Meanwhile, billionaire investor Bill Ackman confirmed that his blank check company, Pershing Square Tontine Holdings, is in talks to spend about $4 billion for a 10% stake in Universal Music Group. He also unveiled plans to launch a new investment vehicle and deploy up to $14 billion on future transactions.

In cryptocurrencies, bitcoin slipped as much as 8% after Elon Musk signaled a potential breakup with the digital asset by posting a broken-heart emoji and a reference to a popular Linkin Park song. Bitcoin has fallen more than 40% since its April record high of near $65,000.

West Texas Intermediate crude was up 0.60%, to $69.22 per barrel. Brent crude, oil’s international benchmark, was also up 0.52%, to $71.68 per barrel,

Gold was down 1.9% to $1873.70 an ounce.

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The 10-year Treasury yield has jumped to its highest in 14 months, cutting further into gains for growth stocks

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Federal Reserve Chairman Jerome Powell.

  • Borrowing costs are rising as implied by the benchmark 10-year Treasury yield, which hit its highest since January 2020.
  • Tech stocks fell as the yield pushed past 1.6%, drawing the Nasdaq Composite down 1% during Wednesday’s trading session.
  • The Fed would likely spring into action if the 10-year yield were to hit 2% by the end of March, says one analyst.
  • See more stories on Insider’s business page.

Borrowing costs as tracked by the 10-year Treasury note yield rose to their highest in 14 months on Wednesday, with investors pricing in expectations of hotter inflation while they cut down high-flying growth stocks.

The yield on the benchmark 10-year Treasury note hit 1.67%, a level not seen since mid-January 2020, before the COVID-19 outbreak was declared a pandemic and before it had accelerated in the US. Yields rise as bond prices drop.

The yield has quickly pushed higher since the start of 2021, from around 0.9%, bolstered by improvement in the world’s largest economy after it and other economies worldwide fell into recession last year.

“What the market is trying to price in is a much more optimistic Fed … that is likely to remain committed to providing more accommodation into this economic recovery,” Ed Moya, senior market analyst at Oanda, told Insider on Wednesday before the release of the Federal Reserve’s economic projections and monetary policy decision at 2 p.m. Eastern.

Along with growth, investors also expect inflation to increase and for the Fed to begin raising interest rates after they slashed them to near zero in March 2020 in response to the health crisis.

The step-up in the 10-year yield, which is tied to a range of lending programs including mortgages, has spurred a pullback in growth stocks, notably large-cap tech stocks, and a rotation into cyclical stocks set to benefit when an economy improves.

Those moves showed up Wednesday with the tech-concentrated Nasdaq Composite falling by 1.1% and the S&P 500‘s information technology sector losing 1.3%. Shares of Apple dropped by 2.2%, Google’s parent company Alphabet declined 1.7% and Microsoft gave up 0.8%.

“You’re probably going to see that the Fed is still going to be stubborn as far as when that first rate hike is going to happen, but the markets are just going to go ahead and price that in a lot sooner,” said Moya.

There are market expectations that the Fed will begin raising its fed funds target rate in 2023 from the current range of zero to 0.25%. Meanwhile, more fund managers now consider higher-than-expected inflation would be the biggest danger to the market, replacing COVID-19 as the main risk, according to a Bank of America survey for March.

The US economy is expected to recover further with the US government circulating COVID-19 vaccines from three companies — Pfizer and its partner BioNTech, Moderna, and Johnson & Johnson — and with about 111 million people already vaccinated.

“Also, it doesn’t hurt when you have almost $2 trillion in [fiscal] stimulus get done since your last policy meeting,” said Moya, adding that “the economy is likely to run hot for a little bit.”

A steady grind higher of the 10-year yield “is completely healthy,” said Moya.

“But if this pace continues [and] by the end of the month we’re above 2%, that is going to be somewhat disruptive to the economic recovery,” which would likely prompt the Fed to take action, he said. The Fed’s tools include buying more Treasury bonds, he added.

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