Renewed Covid Concerns Contributing To Steep Drop On Wall Street

Renewed Covid Concerns Contributing To Steep Drop On Wall Street

July 18, 2022

Stocks have moved sharply lower in morning trading on Monday, giving back ground following the upward move seen last week. The major averages have all moved to the downside, with the tech-heavy Nasdaq leading the way lower.

Currently, the major averages are off their lows of the session but still firmly negative. The Nasdaq is down 229.69 points or 2 percent at 11,405.62, the S&P 500 is down 44.96 points or 1.2 percent at 3,854.42 and the narrower Dow is down 176.43 points or 0.6 percent at 31,161.72.

Renewed Covid concerns may be weighing on the markets as Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant, raising fears of more lockdowns.

Macau also closed all its casinos for the first time in over two years on Monday after a coronavirus outbreak in the world’s biggest gambling hub.

Casino operators Las Vegas Sands (LVS) and Wynn Resorts (WYNN) are posting steep losses following the news, plunging by 9.1 percent and 8 percent, respectively.

Shares of Twitter (TWTR) have also moved sharply lower after Elon Musk called off his $44 billion takeover of the social media giant. Twitter said it plans to pursue legal action to enforce the merger agreement.

Light trading activity may be exaggerating the downward move, as some traders stick to the sidelines amid a lack of major U.S. economic data.

The economic calendar picks up later this week with the release of reports on consumer and producer price inflation, retail sales and industrial production.

Earnings season also unofficially gets underway later this week, as financial giants JPMorgan Chase (JPM), Morgan Stanley (MS), Citigroup (C) and Wells Fargo (WFC) are due to report their quarterly results.

Energy stocks are turning in some of the market’s worst performances on the day, moving sharply lower along with the price of crude oil. Crude for August delivery is plunging $2.72 to $102.07 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.5 percent and the NYSE Arca Oil Index is down by 2.4 percent.

Substantial weakness is also visible among semiconductor stocks, as reflected by the 2.3 percent slump by the Philadelphia Semiconductor Index.

Airline stocks have also shown a significant move to the downside, resulting in a 2.2 percent nosedive by the NYSE Arca Airline Index.

Brokerage, networking and computer hardware stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. China’s Shanghai Composite Index slumped by 1.3 percent and Hong Kong’s Hang Seng Index plunged by 2.8 percent, although Japan’s Nikkei 225 Index bucked the downtrend and jumped by 1.1 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index is down by 0.1 percent, the French CAC 40 Index is down by 0.8 and the German DAX Index is down by 1.2 percent.

In the bond market, treasuries are regaining ground following the sharp pullback seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 12.3 basis points at 2.978 percent.

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