Stocks Recover Early Drop, Extend Their Run to New Highs

17 Aug 2021 · 3rd Party Analysis

Stocks Recover Early Drop, Extend Their Run to New Highs

WRITTEN BY ThorFX

In Summary

  • US equities struggled during the Monday session but managed to end the day higher
  • Dow futures lower by about 100 points in pre-market trading on Tuesday

Stocks on Wall Street finished mostly higher on Monday after they managed to pare losses from earlier in the session. A fear swept into the US markets that a potential slowdown could hurt the rapidly growing US economy after disappointing data from China.

The S&P500 reached its 49th close in record territory for the year, and its fifth consecutive record-setting session. The broad-based market index hovered in the red most of the day but ultimately managed to gain 11.71 points, or 0.26%, to finish Monday trading at 4,479.71.

The Dow Jones Industrial Average advanced 110.02 points, or 0.31%, to a record close of 35,625.40. Strong afternoon momentum pushed the blue-chip index to its 35th all-time high since January, as it notched its fifth straight day of record closings.

The tech-centred Nasdaq Composite was widely muted during the day and finished the session lower by 29.14 points, or 0.20%, to 14,793.76. Investors have largely pushed aside the technology index in favor of stocks more aligned with the economic reopening and the approved $1tn infrastructure package.

The market has been cheering better than expected jobs report, initial jobless claims which have led to an improved outlook for the US economy. Nevertheless, the continued spread of the Delta variant of Covid-19 could weigh on the return of business activity as well as consumer spending as the summer season is coming to an end.

Delta Variant Wreak Havoc on Global Economies

On the Covid-19 front, the latest data shows the US reported as much as 252,369 new cases on Monday. The number is one of the highest one-day totals since the pandemic began. At the peak of the coronavirus health crisis, the US reported its biggest one-day climb in cases on January 8, a total of 300,777. 

The seven-day average has moved higher to 141,365, up from 130,818 a day earlier. The seven-day average is the highest since February 2 and more than double what it was during last summer’s peak when the country did not have an authorized vaccine. 

Presently, about 60% of the total US population has received at least one dose of a Covid-19 vaccine, while 50.8% are fully vaccinated. Official data shows the rate of vaccination now stands at about 766,000 doses per day on average, a drop of 77% from the peak of 3.38m doses given on April 13. 

The highly transmissible Delta variant has already left a mark on the economic recovery in China. Fresh Monday data has shown consumer, industrial and investment activity has been dented in July as the country is struggling to contain the rise of the Delta strain. 

In Europe, the pan-continental Stoxx 600 slipped 2.38 points, or 0.50%, to 473.45. The drop marked the end of a 10-day run of gains, its longest winning streak since 2006. The travel and leisure sector weighed the most on the broad-based index, along with shares of companies in resources and oil-and-gas sectors. 

Today, European markets are mostly trading sideways as investors are predominantly risk-averse. US futures are pointing to the downside ahead of the opening bell. Futures on the Dow are lower by about 150 points. 

Cryptocurrencies today are moderately lower. Bitcoin is now trading at around $45,800, while Ether has moved lower to $3,100.  

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