Wall Street is having its worst day since last May

According to the Wall Street Journal, the overall New York Stock Exchange index, S&P 500, fell 1.6%, its worst performance since mid-May. Stock sell-offs were broad during the day on Monday, reflecting a series of concerns about economic growth and the potential for increased Covid-19 infections that could lead to further restrictions on travel and tourism.

With the fall in oil prices, energy stocks led the declines, but shares of companies operating in the travel sector also fell. Norwegian Cruise Line and United Airlines each fell 5.5%, it is said.

Banks, also sensitive to the economic outlook, also weakened. JPMorgan Chase fell 3.3%, while shares of Bank of America fell 2.6%.

Falling yield on government bonds

A sign that investors were taking refuge in the safety of government bonds and other safe-haven assets, the yield on 10-year Treasuries fell to 1.19% from 1.30% on Friday. Yields, which fall when bond prices rise, have not been this low since last February.

Investors sold stocks of companies directly affected by the restrictions on movement and activity, while buying government bonds and stocks that may benefit from the work-from-home phenomenon.

The rise in the number of Covid-19 cases in many parts of the world, including in highly vaccinated countries like the UK, has prompted investors to lower their expectations for economic growth in the coming months.

There are also concerns that a sharp rise in prices will restrain consumption and cause central banks to withdraw economic stimulus, creating an environment of weaker growth and higher inflation.

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