U.S. stock futures, oil prices and government bond yields slid, amid anxiety that the spread of the Delta coronavirus variant would hold back the global economy.
Futures for the S&P 500 fell 0.8%, signaling opening losses for the broad stock-market gauge after it snapped a three-week winning streak Friday. Contracts for the Dow Jones Industrial Average dropped 1%. Futures on the technology-focused Nasdaq-100 fell 0.4%.
In a sign that investors were sheltering in the safety of government bonds and other safe-haven assets, the yield on 10-year Treasury notes fell to 1.257% Monday from 1.30% Friday. Yields, which fall when bond prices climb, haven’t been that low since mid-February. The WSJ Dollar Index, which tracks the greenback against a basket of other currencies, rose 0.3%.
Oil prices fell after the Organization of the Petroleum Exporting Countries and a Russia-led group of big producers agreed to raise production. Futures on Brent crude, the international benchmark, fell 2.6% to $71.67 a barrel, their lowest level since mid-June.
The moves were reminiscent of trading patterns that prevailed in the early days of the pandemic. Investors sold shares of companies directly affected by restrictions on movement and business, while buying government bonds and stocks that stood to benefit from the work-at-home phenomenon.
Surging cases of the coronavirus in many parts of the world, including highly-vaccinated countries such as the U.K., have prompted investors to dial down their expectations of economic growth in the coming months. Some also are concerned that a steep rise in prices will pinch consumption and prompt central banks to withdraw stimulus, creating an environment of lower growth and higher inflation in which stocks tend to struggle.
“What you’re seeing is a sense that the consumer is starting to be affected quite significantly” by the jump in prices, said
senior macro strategist at Nordea Asset Management.
Business reopenings, rising vaccination rates and government pandemic aid have helped propel rapid gains in consumer spending—the economy’s main driver. But surveys show that inflation, which accelerated to a 13-year high in the U.S. in June, is starting to knock consumers’ confidence in their ability to keep spending, Mr. Galy said.
Airlines and oil-and-gas companies were among the worst performers ahead of the bell in New York.
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