Dow suffers the biggest drop of the year due to fears of the delta variant

Stock markets continue to decline due to fear of the coronavirus

New York (CNN Business) -

Investors are freaking out over the rise in COVID-19 cases as the delta variant spreads across the globe (the Dow index fell 725 points on Monday), a decline of 2 ,1%.

The S&P 500 fell 1.6% and the Nasdaq 1.1%.

This is the worst day for the Dow since the fall of 943 points at the end of October.

But the stock market barometer has had several even bigger crashes since the start of 2020 due to concerns about the covid-19 pandemic.

The Dow plunged more than 1,000 points last year, with five of those market crashes taking place in March, at the start of the pandemic in the United States.

The Dow suffered the largest point drop in its history on March 16, 2020, dropping nearly 3,000 points, representing a free fall of 13%.

• Dow futures fall 1,000 points after the Fed announced the reduction of the interest rate to zero

Investors fear that the variant delta coronavirus could threaten the US economic recovery.

The shares of companies in the sectors that were believed to benefit the most from the reopening of the economy are being the most affected.

American, United and Delta airlines fell more than 4% to 5%.

Cruise operators Carnival, Royal Caribbean and Norwegian fell about 4% to 6% each.

• Vaccine or travel insurance, the new application to travel on cruise ships

Energy values ​​also slumped after a more than 3% drop in oil prices.

Chevron and Exxon Mobil fell 8%.

The group of OPEC + countries also reached an agreement over the weekend to produce more oil, a move that could increase supply and lower crude prices.

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OPEC and its allies will increase oil production 0:58

Long-term bond rates also continued to decline, a sign that bond investors are now much more concerned about a delta-induced economic slowdown than they are about rising inflation fears.

The yield on the 10-year US Treasury bond plunged below 1.2% for the first time since February.

But, as consumer prices continue to climb, some worry about a more insidious threat: the possibility that another COVID-19 outbreak could slow the economy even as inflationary pressures mount.

This is a phenomenon known as stagflation.

"Fear of stagflation will be a major concern for investors if a resurgence in covid infections causes the economy to slow down as consumer prices follow an upward trajectory," said Peter Essele, chief managing officer of Commonwealth Financial Network investments, in an email.

Small American businesses were also hit hard.

The Russell 2000 was down 1.3%.

This index contains mainly stocks of small-cap companies that generate a higher proportion of their income in the United States than in international markets.

The still high number of unvaccinated Americans means that vaccination rates have not reached the threshold necessary to stop the spread of COVID-19.

• Covid-19 cases are on the rise in 45 states.

  In a critical area, hospitalized patients are younger than ever, according to a doctor

Most Americans who have not been previously infected or received no vaccines will likely contract the rapidly spreading delta variant, said Dr. Scott Gottlieb, commissioner of the US Food and Drug Administration. during the Trump administration on CBS's "Face the Nation" on Sunday.

In forty-eight states the number of new cases has increased by at least 10% compared to the previous week, according to data from Johns Hopkins University.

The shares fell on Friday also due to conflicting reports on the health of the American consumer.

Retail sales grew surprisingly in June, but a measure of consumer sentiment in July showed that Americans have less and less confidence in the economy.

CNN Business's Fear and Greed Index, which looks at seven measures of market sentiment, is now showing signs of extreme fear.

Stocks are still up a lot this year from 2020 lows

But cloud-based call center software company Five9 escaped the market sell-off on Monday.

The stock rose 4% on news that video conferencing giant Zoom was acquiring it for nearly $ 15 billion.

Zoom's stock fell.

Covid-19 vaccine maker Moderna, which will join the S&P 500 later this week, was also up 5%.

BioNTech, which makes a Covid-19 vaccine with Pfizer, also rose.

However, Pfizer and Johnson & Johnson, maker of a third COVID-19 vaccine, fell slightly.

Despite recent volatility, stocks are not far from all-time highs and are having a strong year.

Inflation in the US soars to its 13-year high 1:51

The Dow remains more than 10% higher in 2021 and is just 3% below its all-time high.

The S&P 500 is up 13% this year and is also 3% from its all-time high.

What's more, the S&P 500 is up about 90% from its March 2020 COVID-induced bear market lows. Some strategists believe the recent selloff represents an opportunity.

"We do not expect total lockdowns to occur again in the United States, so while the damage from the delta variant may be significant, we are still in the 'buy the dip' arena," said Bryce Doty, senior portfolio manager at Sit Fixed Income Associates, in a report Monday.

- Anneken Tappe and Matt Egan contributed to this report.

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