Stock Market Plummets Amidst Growing Fears Of COVID's Delta Variant
(CBS New York) -- The stock market can be like a rollercoaster ride. Unfortunately for many investors most of Monday's ride was downhill. After topping 35,000 and reaching record highs last week, the Dow Jones plummeted over 700 points to finish the day at 33,873. The S&P 500 was off by about 1.6 percent, while the Nasdaq composite fell 1.1 percent. It was the market's worst day of the year so far. But why was the market down so much today?
The drop is attributed to multiple factors. Near the top of the list is the rise of COVID's Delta variant, which is more dangerous and more contagious than other strains. Domestic vaccination numbers continue climb at a rate of about 500,000 shots per day. But while the U.S. population is 48.6 percent vaccinated, state percentages range from 66.9 percent in Vermont to 33.7 percent in Alabama. Outbreaks are increasingly occurring in areas where fewer people per capita have received shots. New cases increased by about 70 percent last week, with most states seeing rises.
The U.S. economy is largely open, though some fear that could change if the Delta variant takes hold. Other countries, where vaccinations are harder to come by, have stricter limitations. Japan, for example, is the world's third biggest economy, but only about 20 percent of its residents are fully vaccinated. The upcoming Olympics will be held completely without foreign or domestic fans in attendance. Outbreaks are growing increasingly common across Southeast Asia as well.
With such a tightly connected international economy, a virus outbreak in one part of the world can have far-reaching effects in other places. The domestic economy can't continue its rise without goods from around the world and the smooth flow of supplies that go into making those goods. Look no further than the ongoing shipping delays that have backed up goods for months or the semiconductor issues that have wreaked havoc on car manufacturers' production line. Economic slowdowns caused by COVID elsewhere will drag down the U.S. economy.
Another concern is the tapering off of pandemic relief efforts at home. A fourth stimulus check is unlikely. The $300 weekly federal unemployment bonus is set to end on Labor Day, though 22 states have already discontinued it. Payments for federal student loans, many of which have been in administrative forbearance since March of 2020, will resume this fall. As well, the Federal Reserve looks poised to ease up its assistance to markets later this year. Some experts wonder if the recovery can continue its torrid pace without the help of the federal government.
Stock market losses were felt across the board in Monday trading. But companies dependent on a strong recovery took some of the heaviest losses. United Airlines fell 6.2 percent, while Carnival Cruise Line fell 5.6 percent. At the same time, U.S. air travel remains strong, and consumer spending bumped up 0.6 percent in June, according to the Commerce Department.
The Dow Jones sank over 10,000 points in the early days of the pandemic, falling from over 29,000 to just over 19,000. It lost about a third of its value in that span. The Dow has since regained regained all of that and then some in a run that's lasted close to 16 months. Will concerns over the Delta variant and a slowing recovery end the run?