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The stock market is getting hit hard Thursday morning after Japan declared a state of emergency due to Covid-19 ahead of the start of the Summer Olympics.
S&P 500
futures have fallen 1.2%, while
Dow Jones Industrial Average
futures have dropped 446 points, or 1.3%, and
Nasdaq Composite
futures have declined 1.2%.
The stock market’s massive rally since its March 2020 bottom has been predicated on one thing: That Covid would be defeated, and the economy would return to something that looks like normal. But with the spread of the Delta variant and new lockdowns, that narrative is being challenged—big time. If Covid is back, then not only has economic growth peaked, but could be set to slow.
“Equity markets globally are getting slammed this morning as stocks have started to drink the fear of the bond markets that reflation has peaked,” NatAlliance Securities’ Andrew Brenner “Is this the start of an equity correction that we thought would start in the middle of August? …We don’t think so but it is ugly this morning.”
The stock market is following the 10-year Treasury yield, which has slumped 0.048 point to 1.273% Thursday morning, lower. How far can it fall? “The 200-Day moving average is at 1.23% where 10yr yields should hesitate fromdropping further,” writes Seaport Global’s Tom Digaloma.
Don’t expect the stock market to stop falling until bond yields do.
Here are stocks making moves in early Thursday trading:
Charles Schwab
(SCHW) has dropped 4.6% after getting downgraded to Neutral from Conviction Buy at Goldman Sachs.
D.R. Horton
(DHI) has fallen 2.7% after getting cut to Sector Perform from Outperform at RBC Capital.
Dish Network
(DISH) has declined 2.2% despite getting upgraded to Hold from Reduce at HSBC.
Freeport-McMoRan
(FCX) has slumped 4.3% after getting cut to Underweight from Equal Weight at Barclays.
Overstock.com
(OSTK) has gained 1.8% after getting started at Buy at Needham and getting added to the firm’s conviction list.
Write to Ben Levisohn at [email protected]