Dow futures slide 1% as virus surge raises growth
worries
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[July 19, 2021] By
Devik Jain
(Reuters) - Futures tracking the blue-chip
Dow fell 1% on Monday, with economy-linked value and travel stocks
taking a hit after a spike in global COVID-19 cases raised fresh
concerns about slowing economic growth.
New U.S. COVID-19 cases surged 70% last week compared with the prior
seven days to an average of 30,000 new infections a day, fueled by the
Delta variant. Deaths rose 26% week-over-week to an average of 250 lives
lost a day, mostly in unvaccinated patients.
Shares of travel companies, which took a hammering last year during
lockdowns but have climbed recently on reopening hopes, led declines
before the opening bell.
Airline operators and cruiseliners including Southwest Airlines Co,
Delta Air Lines Inc, United Airlines, American Airlines, Royal Caribbean
Group, Carnival Corp and Norwegian Cruise Line dropped between 2.0% and
3.6%.
Rate-sensitive lenders Bank of America Corp, JPMorgan Chase & Co,
Goldman Sachs Group Inc, Morgan Stanley and Citigroup Inc all shed about
2% each, tracking a fall in the benchmark 10-year Treasury yield to
mid-February lows. [US/]
"The peak of economic growth rates is behind us and growth worries are
back. The good news is that even if the peak of some economic indicators
is behind us, equities should continue to perform positively in the
medium term in a positive economic environment," Berenberg strategists
said in a note.
"However, high valuations, COVID-19 fears, low trading volumes over the
summer and high investor equity allocations argue against significantly
rising markets for the time being."
Marathon Petroleum Corp, Chevron Corp, Schlumberger NV, Exxon Mobil
Corp, Halliburton and Occidental Petroleum fell between 1.8% and 4.1%,
as oil prices slid after OPEC+ producers agreed to raise output. [O/R]
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A Wall Street sign is pictured outside the New York Stock Exchange
in New York, October 28, 2013. REUTERS/Carlo Allegri
Wall Street's main indexes closed lower on Friday, weighed down by declines in
Amazon, Apple and other heavyweight technology stocks, while defensive utilities
rallied 1% and real estate hit an intraday record high.
After strong quarterly reports from big banks last week, focus shifts to tech
earnings with companies including International Business Machines Corp, Netflix,
Texas Instruments and Intel set to report this week.
Analysts on average expect 72% growth in earnings per share for S&P 500
companies, according to IBES estimate data from Refinitiv.
At 6:43 a.m. ET, Dow E-minis were down 367 points, or 1.06%, S&P 500 e-minis
were down 33.25 points, or 0.77%, and Nasdaq 100 e-minis were down 57 points, or
0.39%.
Johnson & Johnson slipped 0.8% after Reuters reported that the drugmaker is
exploring a plan to offload liabilities from widespread baby powder litigation
into a newly created business that would then seek bankruptcy protection.
U.S.-listed shares of Alibaba Holding, Baidu and ridesharing app Didi Global
declined more than 2% on renewed fears of anti-monopoly action against major
technology firms.
Zoom Video Communications Inc fell 2% after the teleconferencing services
provider announced a $14.7 billion all-stock deal to buy cloud-based call center
operator Five9 Inc.
Five9's shares jumped 8.9%.
(Reporting by Devik Jain in Bengaluru; Editing by Maju Samuel)
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