Stock market collapses amid growing fears of COVID’s delta variant – CBS Philly
(CBS New York) – The stock market can be like a roller coaster ride. Unfortunately for many investors, most of Monday’s race was downhill. After breaking above 35,000 and setting record highs last week, the Dow Jones fell more than 700 points to end the day at 33,873. The S&P 500 lost around 1.6%, while the Nasdaq composite fell by 1.1%. It was the worst day of the year for the market so far. But why has the market fallen so much today?
The decline is attributed to several factors. Near the top of the list is the rise of the Delta variant of COVID, which is more dangerous and contagious than other strains. The number of national vaccinations continues to climb at a rate of around 500,000 injections per day. But while the US population is 48.6 percent vaccinated, state percentages range from 66.9 percent in Vermont to 33.7 percent in Alabama. Epidemics are increasingly occurring in areas where fewer people per capita have received vaccines. New cases rose about 70% last week, with most states seeing increases.
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The US economy is wide open, although some fear this will change if the Delta variant takes hold. Other countries, where vaccinations are more difficult to obtain, have more stringent limitations. Japan, for example, is the world’s third-largest economy, yet only about 20% of its residents are fully immunized. The next Olympic Games will be held entirely without the presence of foreign or domestic fans. Epidemics are increasingly common in Southeast Asia as well.
With such a closely connected international economy, a virus outbreak in one part of the world can have far-reaching effects in other places. The national economy cannot continue to rise without commodities from all over the world and the fluidity of supplies that go into the manufacture of these commodities. Look no further than the ongoing shipping delays that have backed up goods for months or the semiconductor issues that have wreaked havoc on the production line of automakers. Economic downturns caused by COVID elsewhere will drag the U.S. economy down.
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Another concern is the decline in home pandemic relief efforts. A fourth stimulus check is unlikely. The weekly federal unemployment premium of $ 300 is expected to end on Labor Day, although 22 states have already removed it. Federal student loan payments, many of which have been on administrative forbearance since March 2020, will resume this fall. In addition, the Federal Reserve appears poised to ease its aid to markets later this year. Some experts question whether the recovery can continue at its breakneck pace without the help of the federal government.
The market losses were felt in all of Monday’s trading. But companies dependent on a strong recovery have suffered some of the heaviest losses. United Airlines fell 6.2%, while Carnival Cruise Line fell 5.6%. At the same time, air travel to the United States remains strong and consumer spending rose 0.6% in June, according to the Commerce Department.
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The Dow Jones lost over 10,000 points at the start of the pandemic, from over 29,000 to just over 19,000. It lost about a third of its value in that time. The Dow has since regained all of that and then some in a race that lasted almost 16 months. Will worries about the Delta variant and a slower recovery end the race?