U.S. Stocks Move Notably Lower Amid Renewed Covid Concerns

Following the lackluster performance seen last Friday, U.S. stocks showed a significant move to the downside during trading on Monday. The major averages regained ground after an early slump by once again came under pressure going into the close.

The major averages all ended the day firmly in negative territory, with the tech-heavy Nasdaq leading the way lower. While the Nasdaq tumbled 262.71 points or 2.3 percent to 11,372.60, the S&P 500 slumped 44.95 points or 1.2 percent to 3,854.43 and the narrow Dow fell 164.31 points or 0.5 percent to 31,173.84.

Renewed Covid concerns contributed to the weakness on Wall Street, 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 Wynn Resorts (WYNN) and Las Vegas Sands (LVS) posted steep losses following the news, plunging by 6.5 percent and 6.3 percent, respectively.

Shares of Twitter (TWTR) 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 have exaggerated the downward move, as some traders stuck 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.

Sector News

Oil service stocks showed a substantial move to the downside on the day, with the Philadelphia Oil Service Index plunging by 2.8 percent.

The weakness among oil service stocks came as the price of crude oil for August delivery climbed well off its worst levels but still fell $0.70 to $104.09 a barrel.

Significant weakness was also visible among airline stocks, as reflected by the 2.7 percent nosedive by the NYSE Arca Airline Index.

Semiconductor stocks also saw considerable weakness on the day, dragging the Philadelphia Semiconductor Index down by 2.5 percent.

Networking, steel and retail stocks also showed notable moves to the downside, moving lower along with most of the other major sectors.

Other Markets

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.

Most European stocks also moved to the downside on the day. While the U.K.’s FTSE 100 Index ended the session nearly unchanged, the French CAC 40 Index slid by 0.6 percent and the German DAX Index tumbled by 1.4 percent.

In the bond market, treasuries regained 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, slumped 11 basis points to 2.991 percent.

Looking Ahead

The economic calendar remains quiet on Tuesday, although snack and beverage giant PepsiCo (PEP) is due to release its second quarter results before the start of trading.

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