The Dow Jones Industrial Average on Monday posted its worst day of 2021 and stocks finished broadly and sharply lower as investors moved into safe-haven assets and weighed how rising COVID-19 cases might affect the economic recovery in the U.S. and globally.
The Dow industrials finished down 725 points, or 2.09%, at 33,962, the S&P 500 dropped 1.59% and the Nasdaq slumped 1.06%.
At their lowest levels on Monday, the Dow blue chips slumped 946 points, or 2.7%, the S&P 500 gave back 2.2% and the Nasdaq fell 1.7%.
Bonds rallied, pushing the yield on the benchmark 10-year Treasury down Monday to 1.19%, the lowest in five months.
Shares of cyclical stocks, particularly in the energy and financial sectors, slumped on Monday.
Airlines such as United Airlines (UAL) - Get Report and American Airlines (AAL) - Get Report and cruise lines like Norwegian Cruise Line Holdings (NCLH) - Get Report were among the biggest laggards. They tumbled on fears about the spread of the COVID-19 delta variant and worries that new lockdown restrictions will stall the economic rebound.
"While pullbacks like we’re seeing (Monday) can rattle the nerves, it’s important to remember that the market is near all-time highs, and corrections are a natural part of a healthy market," said Chris Larkin, managing director of trading at E-Trade.
And TheStreet's Jim Cramer was clear: "You have to start buying here simply because you don't know when the bottom's going to be," Cramer said from the floor of the New York Stock Exchange.
"It's a huge selloff based on the idea that a bunch of athletes got it, the breakthrough is what people are worried about, the Johnson & Johnson -- people are worried about -- and the Olympics."
Equities extended declines from Friday. That's when stocks finished lower after surging inflation led to an unexpected decline in U.S. consumer sentiment in early July. For the week, the Dow fell 0.5%, the S&P 500 declined 1% and the Nasdaq dropped 1.9%.
It was the first weekly loss for the S&P 500 following three weeks of gains.
Oil prices dropped Monday after an OPEC+ supply deal. West Texas Intermediate crude, the U.S. benchmark, fell 7.63% to $66.33 a barrel.
The delta variant of COVID-19 has been spreading rapidly in parts of Asia, including Japan, where the Olympics will begin Friday, and in the U.S.
Delta is the most transmissible COVID variant yet, U.S. Surgeon General Vivek Murthy told CNN. Experts said it was worsening the rise in cases among unvaccinated Americans.
Great Britain, which dropped nearly all its domestic restrictions on business and travel as of Monday, recorded a world-high 48,000 new infections on Sunday, mostly as a result of the fast-spreading delta variant.
Second-quarter earnings season will ramp up this week and next. Profits for companies in the S&P 500 are expected to jump 64% from a year earlier, according to FactSet.
Reports are expected this week from the likes of International Business Machines (IBM) - Get Report, Netflix (NFLX) - Get Report, Johnson & Johnson (JNJ) - Get Report, Intel (INTC) - Get Report, Abbott Laboratories (ABT) - Get Report, Union Pacific (UNP) - Get Report, Chipotle Mexican Grill (CMG) - Get Report and Honeywell (HON) - Get Report.
The purchase of Five9 is Zoom Video's largest-ever acquisition. Shares of Five9 rose 5.9%.