Global stock markets swooned Monday, with the Dow slumping more than 500 points at the open, as investors grow increasingly anxious about a delta-led resurgence in coronavirus cases and the threat it poses to economic growth. Oil prices also fell sharply.
The delta variant has become the dominant strain worldwide and is surging rapidly, even in countries with high vaccination rates. Positive cases are trickling steadily out of the Olympic Village ahead of the Games kickoff later this week. Many are fearful the uptick will lead to a resumption in travel and business restrictions.
Asian markets closed in the red across the board, with Hong Kong’s Hang Seng Index leading the losses with a more than 1.8 percent drop. European markets posted even steeper declines, with Germany’s DAX and France’s CAC40 both tumbling 3 percent and the Stoxx 600 off more than 2.6 percent.
By 10:20 a.m., the Dow Jones industrial average had fallen more than 800 points, or 2.3 percent, to 33,887. The Standard & Poor’s 500 index had fallen 1.8 percent to 4,246 and the tech-heavy Nasdaq had fallen 1.5 percent to 14,205.
Companies whose fates are tethered to the recovery were hit hard in early trading, with Carnival Cruises, American Airlines and United Airlines all sliding more than 7 percent.
“The big concern for the market is whether we going to see a slowdown in the global economic recovery,” Russ Mould, investment director at AJ Bell, wrote in commentary Monday. “This could be the overriding force which results in a bad period for equities in the weeks ahead.”
The market jitters and growing cases counts echo the earlier days of the pandemic, when stocks whipsawed with record volatility as investors struggled to get their arms around the breadth of the pandemic’s impact on the global economy.
Investors flocked to safe havens, pushing the yield on the 10-year U.S. Treasury note down to 1.229 percent, its lowest level since February. Bond yields fall as prices rise.
Oil prices also tanked. Over the weekend, OPEC and its allies agreed to ramp up production despite the uncertainty with the delta variant, saying that oil demand is showing “clear signs of improvement” in a statement Sunday. Brent crude, the international oil benchmark, shed more than 4.7 percent to trade at $70.10 per barrel. West Texas intermediate crude, the U.S. oil benchmark, declined more than 5 percent to $68.09.
Markets had been a on a record-breaking run after cratering in the early days of the pandemic. Despite today’s sell-off, the Dow remains up nearly 27 percent for the year, according to Marketwatch.