Stocks Tumble as Growth Concerns Grip Wall Street
The drop marked a sudden shift in sentiment in the stock market; investors in the bond market have been signaling their concerns about the economy for days.
Stocks fall as bond yields continue to drop, reflecting worries about growth.
July 8, 2021, 9:12 a.m. ET
Stocks fell on Thursday and bond yields dropped as investor anxiety over the bumpy economic recovery rippled through financial markets.
The S&P 500 fell about 1 percent, on track for its biggest decline since at least mid-June, while benchmarks in Europe were down by more than 2 percent. The selling came after stock investors had enjoyed a steady run into record territory in recent weeks: Before Thursday, stocks had fallen only twice in the thirteen previous trading days.
Although the drop marked a sudden shift in sentiment in the stock market, investors in the bond market have been signaling their concerns about the economy for days. Yields on 10-year Treasury notes, a benchmark for borrowing costs across the economy and a measure of sentiment about the outlook for growth, have fallen steadily since late June.
Yields fall when traders buy bonds, something they do when they’re worried about the economy or other factors that could threaten riskier investments. On Thursday the yield fell further, dropping as low as 1.28 percent, a level last seen in early February.
The rise of the highly contagious Delta variant of the coronavirus has served as a reminder that the pandemic remains a threat to both public health and the economy. Though infections and deaths in the United States are near their lowest levels since testing became widely available, on Wednesday, the Centers for Disease Control and Prevention estimated that the Delta variant now accounts for more than half of new infections in the United States.
“There’s growing concern on how robust the economic recovery will be,” said Edward Moya, a senior market analyst at Oanda, a foreign currency exchange. “The virus spread in other countries is starting to suggest we won’t have a strong second half of the year.”
Tourism and travel companies — which are a proxy for investor sentiment about the pandemic — fell on Thursday but recouped some of the worst of their losses as the day went on.
The decline also came as Olympic organizers offered a stark reminder how quickly the pandemic can derail plans — they barred spectators from most events after the declaration of a new state of emergency in Tokyo.
After falling more than 3 percent in early trading, Carnival Corporation and Norwegian Cruise Line were only slightly lower by late morning, while American Airlines was slightly higher.