Wall St ends sharply lower on virus fears

·3-min read

A surge in Delta variant infections has sparked a broad sell-off on Wall Street as investors fear renewed COVID-19 shutdowns and a protracted economic recovery.

All three major US stock indexes ended the session sharply lower, with the S&P and the Nasdaq suffering their largest one-day percentage drop since mid-May.

The blue-chip Dow had its worst day in nearly nine months.

The risk-off sentiment also sent US 10-year Treasury yields sliding, pulling rate sensitive banks stock prices with them.

"Much of it is related to the Delta (variant)," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

"There's some concern too that maybe the economy is not going to open up as quickly as everyone thinks, and the big boom that everyone's expecting is going to be more of a pop than a boom."

"We're woefully off of breakneck economic growth, and judging by the activity we're seeing we're overestimating a lot of the economic reports," Nolte added.

The highly contagious COVID-19 Delta variant, now the dominant strain across the globe, has caused a surge in new infections and deaths, nearly exclusively among unvaccinated people.

"Global availability of the vaccine has been an issue from day one," Nolte said.

"That's been out there for a long time. This is the latest iteration of that. We still have a long way to go."

Travel and leisure stocks plunged, with the S&P 1500 Airline index and the S&P 1500 Hotel and Restaurant index losing significantly more ground than the broader market.

The CBOE Volatility index, a gauge of investor anxiety, touched its highest level in two months.

The Dow Jones Industrial Average fell 724.56 points, or 2.09 per cent, to 33,963.29, the S&P 500 lost 68.36 points, or 1.58 per cent, to 4,258.8 and the Nasdaq Composite dropped 152.25 points, or 1.06 per cent, to 14,274.98.

All 11 major sectors in the S&P 500 closed deep in negative territory.

Second-quarter reporting season is under way, with 41 of the companies in the S&P 500 having reported.

Of those, 90 per cent have beaten consensus estimates, according to Refinitiv.

Among high-profile names, Netflix, Twitter, Johnson & Johnson, United Airlines and Intel, along with a host of industrials from Honeywell to Harley-Davidson are due to post results this week.

International Business Machines Corp results are expected shortly.

Analysts now expect year-on-year S&P 500 earnings growth of 72 per cent for the April to June period, substantially higher than the 54 per cent annual growth forecast at the beginning of the quarter, per Refinitiv.

Zoom Video Communications Inc announced a $US14.7 billion ($A20.1 billion) all-stock deal to buy cloud-based call centre operator Five9 Inc.

The teleconferencing services provider's shares fell on the news while Five9's jumped.

Tech tensions between the United States and China grew more heated with the US and its allies accusing officials in Beijing of a global hacking campaign while shares of Chinese tech firms listed on foreign exchanges dropped amid fears of regulatory crackdowns.

US-listed shares of China-based ride-hailing app Didi Global extended their decline.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting