Stocks End Sharply Lower on Growing Risk Aversion
9:55 am Thursday, July 22nd, 2021
(July 19, 2021 4:04 PM) Stocks, oil prices and government-bond yields slid Monday as anxiety mounted over the spread of the Delta coronavirus variant and its potential impact on the global economy.
All 11 S&P 500 sectors are trading lower with losses ranging from 1.0% (consumer staples) to 4.8% (energy), all 30 Dow components are trading lower, and declining issues have a 7:1 advantage over advancing issues at the NYSE. Value/cyclical stocks are underperforming while growth stocks are faring relatively better.
Today’s weakness is being attributed to ongoing growth concerns, fueled by the spread of the Delta Covid variant, and a fear that there could be a larger pullback in store. The 10-yr yield being down ten basis points to 1.20% has been a signpost for growth concerns.
In addition, WTI crude futures are down 7.5%, while the CBOE Volatility Index has spiked 33% to 24.60 as investors brace for further equity weakness.
Regarding a pullback, it’s worth noting that the Russell 2000 just corrected 10% from its recent high on June 25 to today’s intraday low. The S&P 500, on the other hand, is only down 3.6% from its record high last week and is currently trading a few points below its 50-day moving average (4240).
In the growth-stock space, NVIDIA (NVDA) was up 3.40%, and stay-at-home stocks like Peloton (PTON), DoorDash (DASH), and DocuSign (DOCU) were up nicely, too.
Zoom Video (ZM), however, was down 2.15% after announcing it will acquire Five9 (FIVN) for $14.7 billion in an all-stock transaction. Separately, Ingersoll-Rand (IR) confirmed it proposed last month to acquire SPX Flow (FLOW) for $85/share, or $3.59 billion, in cash.
Today’s economic data was limited to the NAHB Housing Market Index for July, which decreased to 80 (consensus 82) from 80 in June.
