Wall Street Stocks Bounce Back After Sharp Sell-off

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Key Takeaways

• US stocks rebound from a sharp Monday sell-off, Nasdaq rallies over 220 points
• Broad-based upside swing lifts major markets on both sides of the Atlantic

Equities on Wall Street snapped back a day after they endured a heavy selling pressure triggered by a risk-off approach to markets due to the spread of the Delta coronavirus variant. Investors on Tuesday dialed down concerns that the growing virus threat could stunt economic growth and piled back into stocks that were hit the hardest a day earlier.

The broad-based S&P500 erased almost all losses as it climbed 1.52%, or 64.57 points, to finish the session at 4,323.06. The Dow Jones Industrial Average was able to pare back as much as 75% of its Monday decline. The 30-stock index added 549.95 points, or 1.62%, to close at 34,511.99.

The Nasdaq Composite brushed off signs of weakness and staged a comeback rally. The tech-focused index erased its 152-point decline on Monday, and added a total of 223.89 points, or 1.57%, to end the trading day at 14,498.88.

After Tuesday’s gains, all three major indexes hover between 1.20% and 1.50% from their record highs made earlier in the month, on July 12.

Stocks Unhindered by Delta Fears

The quick rebound a day after stocks experienced their worst performance since October suggested that even amid growing uncertainty over the Delta strain, investors still see attractive opportunities in the market.

In corporate news, Netflix announced its quarterly earnings report on Tuesday, after the closing bell. The streaming giant delivered mixed results. It added 1.54 million new memberships for the June quarter, beating estimates of 1.19 million. Earnings per share, however, arrived at $2.97, vs $3.16 expected. Revenue was above the consensus, $7.34bn, vs $7.32bn.

Netflix surprised investors with the news that it will push into the gaming sector. Games, a new content category for mobile devices, will be included in Netflix subscriptions at no additional cost.

As worries surrounding the Delta variant were lifted from stocks on Tuesday, the infectious disease continued to record new increases in daily cases in the US. The more contagious strain, according to CDC director Rochelle Walensky, is rapidly becoming the most dominant variant of the coronavirus.

Data from the CDC estimates over 83% of new cases are now caused by the Delta variant. “This is a dramatic increase, up from 50 percent for the week of July 3,” Ms. Walensky said, adding that areas with low vaccination rates have higher percentages.

The Delta variant is quickly sweeping across continents and countries, including those with relatively successful vaccine campaigns where the majority of people are vaccinated, such as the UK and the US.

Economists and analysts are divided over the impact the new wave of Delta cases would have on the economy. While some expect the rising cases to slightly delay the economic expansion, others indicate the growing threat could spiral out of control and derail the global economic recovery.

Overseas, European markets also pushed higher on Tuesday. Market participants staged a moderate comeback across European bourses, lifting the region-wide Stoxx 600 by 0.52%. Country-centered indexes were all in the green. France’s CAC40 led the gains, up 0.81%.

Swiss banking giant UBS reported a 63% rise in profit for the second quarter. The largest wealth manager in the world said its assets rose 4% to $3.2tn.

Meanwhile, Bitcoin and cryptocurrencies declined in a broad-based selling momentum on Tuesday. The flagship digital asset reached a low of $29,450. Crypto circles did not allow the sell-off to extend further and the price of bitcoin closed at $29,800, lower by roughly 3% on the day.