June 8, 2023


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Dow closes down more than 700 points in worst day of 2021

U.S. stocks fell aggressively Monday on concerns that a rebound in Covid-19 cases would slow global economic growth.

The Dow closed down 726 points, having fallen by 946 points at its session low. The S&P 500 closed down 1.6 percent and the Nasdaq Composite finished the day down by 1.3 percent.

Stocks that would most directly benefit from a continuing swift reopening of the economy led the losses, with shares of United Airlines falling more than 7 percent. Key stocks linked to the global economy pulled back, with Boeing and General Motors each falling by more than 5 percent.

“Consumer concern about inflation as well as a rise in new cases of Covid-19 among vaccinated Americans could weigh on consumer sentiment in the coming months even as employment and incomes grow as the economy reopens,” Oppenheimer Chief Investment Strategist John Stoltzfus said in a report Monday.

Covid cases have rebounded in the U.S. this month with the delta variant spreading among the unvaccinated. The U.S. is averaging nearly 30,000 new cases a day in the last seven days ending Friday, up from a seven-day average of around 11,000 cases a day a month ago, according to data from the Centers for Disease Control and Prevention. Cases were already flaring up around the world because of the delta variant.

“The market appears ready to take on a more defensive character as we experience a meaningful deceleration in earnings and economic growth,” wrote Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, in a note Monday. “Market breadth has been deteriorating for months and is just another confirmation of the mid-cycle transition, in our view. It usually ends with a material (10-20 percent) index level correction.”

Oil prices fell on fears of slowing growth and as OPEC+ agreed to begin phasing out production cuts. Energy stocks were among the worst performers in premarket trading with ConocoPhillips off by more than 3 percent Exxon Mobil lost 3 percent. WTI crude shed 3 percent to about $69.36 a barrel.

A busy week of earnings is on deck, with nine Dow components set to report and 76 S&P companies will provide quarterly updates. United Airlines and American Airlines will report, as will social media companies Snap and Twitter. CSX, Johnson & Johnson, Coca-Cola, Honeywell, IBM, Intel and Netflix are also on the docket.

Inflation fears weighed on stocks last week, with a U.S. consumer sentiment index from the University of Michigan released on Friday showing that consumers believe prices will jump 4.8 percent over the next year. This is the steepest climb since August 2008. Earlier in the week, the June Consumer Price Index showed that inflation jumped 5.4 percent year-over-year, spooking investors.