By Devik Jain
(Reuters) – Futures tracking the blue-chip Dow fell 1% on Monday, with economy-linked value and travel stocks taking a hit after a spike in global COVID-19 cases raised fresh concerns about slowing economic growth.
New U.S. COVID-19 cases surged 70% last week compared with the prior seven days to an average of 30,000 new infections a day, fueled by the Delta variant. Deaths rose 26% week-over-week to an average of 250 lives lost a day, mostly in unvaccinated patients.
Shares of travel companies, which took a hammering last year during lockdowns but have climbed recently on reopening hopes, led declines before the opening bell.
Airline operators and cruiseliners including Southwest Airlines Co, Delta Air Lines Inc, United Airlines, American Airlines, Royal Caribbean Group, Carnival Corp and Norwegian Cruise Line dropped between 2.0% and 3.6%.
Rate-sensitive lenders Bank of America Corp, JPMorgan Chase & Co, Goldman Sachs Group Inc, Morgan Stanley and Citigroup Inc all shed about 2% each, tracking a fall in the benchmark 10-year Treasury yield to mid-February lows. [US/]
“The peak of economic growth rates is behind us and growth worries are back. The good news is that even if the peak of some economic indicators is behind us, equities should continue to perform positively in the medium term in a positive economic environment,” Berenberg strategists said in a note.
“However, high valuations, COVID-19 fears, low trading volumes over the summer and high investor equity allocations argue against significantly rising markets for the time being.”
Marathon Petroleum Corp, Chevron Corp, Schlumberger NV, Exxon Mobil Corp, Halliburton and Occidental Petroleum fell between 1.8% and 4.1%, as oil prices slid after OPEC+ producers agreed to raise output. [O/R]
Wall Street’s main indexes closed lower on Friday, weighed down by declines in Amazon, Apple and other heavyweight technology stocks, while defensive utilities rallied 1% and real estate hit an intraday record high.
After strong quarterly reports from big banks last week, focus shifts to tech earnings with companies including International Business Machines Corp, Netflix, Texas Instruments and Intel set to report this week.
Analysts on average expect 72% growth in earnings per share for S&P 500 companies, according to IBES estimate data from Refinitiv.
At 6:43 a.m. ET, Dow E-minis were down 367 points, or 1.06%, S&P 500 e-minis were down 33.25 points, or 0.77%, and Nasdaq 100 e-minis were down 57 points, or 0.39%.
Johnson & Johnson slipped 0.8% after Reuters reported that the drugmaker is exploring a plan to offload liabilities from widespread baby powder litigation into a newly created business that would then seek bankruptcy protection.
U.S.-listed shares of Alibaba Holding, Baidu and ridesharing app Didi Global declined more than 2% on renewed fears of anti-monopoly action against major technology firms.
Zoom Video Communications Inc fell 2% after the teleconferencing services provider announced a $14.7 billion all-stock deal to buy cloud-based call center operator Five9 Inc.
Five9’s shares jumped 8.9%.
(Reporting by Devik Jain in Bengaluru; Editing by Maju Samuel)
