Dow futures drop over 350 points as spread of delta variant continues

Stock-index futures pointed to a lower start Monday, with concerns about the global spread of the delta variant of the coronavirus that causes COVID-19 getting much of the blame as investors prepared for another big week of corporate earnings.

What are major indexes doing?
  • Futures on the Dow Jones Industrial Average
    fell 366 points, or 1.1%, to 34,198.

  • S&P 500 futures
    were down 36.60 points, or 0.9%, at 4,282.

  • Nasdaq-100 futures
    dropped 83.50 points, or 0.6%, to 14,587.

Stocks ended lower Friday, with all three major indexes down for the week, ending a string of three, consecutive weekly wins. The Dow
saw a 0.5% weekly decline, while the S&P 500
slid 1% and the Nasdaq Composite
shed 1.9%.

What’s driving the market?

Pressure on global equity markets Monday was attributed largely to the continued rise in the number of COVID-19 cases world-wide.

“Markets seem to be grappling with the fear that the virus isn’t going away despite widespread vaccinations in the major economies,” said Marios Hadjikyriacos, senior investment analyst at XM, in a note.

“New and more resilient mutations might be a perpetual phenomenon that wreaks havoc, especially in developing countries, ultimately keeping a lid on the recovery,” he said. “The overwhelming firepower from governments and central banks was enough to fight the pandemic, but not enough to annihilate it.”

Concerns about the virus are particularly problematic for sectors and industries, such as travel, that were expected to benefit the most from the reopening of the global economy.

Meanwhile, Treasurys continued to rally, keeping pressure on yields, which move in the opposite direction of prices. The yield on the 10-year Treasury note
was down more than 5 basis points near 1.25%.

Read: Does the bond market have it wrong about inflation?

Earnings season picks up steam this week, with nearly a third of the 30 Dow Jones Industrial Average components and more than 80 S&P 500 companies are expected to report in the week ahead. Performance so far this quarter has been strong, with 85% of S&P 500 companies that have reported beating expectations and none providing guidance lower than expectations so far, according to John Butters, senior earnings analyst at FactSet.

Earnings highlights for the week ahead include Netflix Inc.
on Tuesday and Intel Corp.
on Thursday.

Earnings Preview: What does a mature streaming service look like? Netflix is about to show us

A busy week of housing data kicks off with the July reading of the National Association of Home Builders index at 10 a.m. Eastern.

Which companies are in focus?
  • Shares of Five9 Inc.
    surged more than 8% in premarket trading after the announcement of a $14.7 billion all-stock buyout deal by Zoom Video Communications Inc. ZM, over the weekend. Zoom shares slumped 2%.

  • Bill Ackman’s Pershing Square Tontine Holdings
    said Monday that it was abandoning a deal to buy a 10% stake in Universal Music Group, citing regulatory and shareholder concerns. PSTH shares were up marginally in premarket trade Monday.

  • Cal-Maine Foods Inc.
     reported Monday a surprise fiscal fourth-quarter loss and revenue that fell below expectations, with egg sales dropping as the lifting of COVID-19-related restrictions led to less meals prepared at home. Shares were down 0.2%.

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