Dow futures slump 500 points as recovery fears resurface

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Global markets slumped Thursday, with Dow futures pointing to a more than 500-point loss at the opening bell as investors worried over emerging threats to the economic recovery, from a pandemic resurgence to labor market pressures.

© Ahn Young-Joon/AP A currency trader passes by screens showing foreign exchange rates at KEB Hana Bank in Seoul. Global markets turned negative Thursday amid fears of an economic slowdown.

On Thursday, Japan declared a state of emergency for Tokyo as it tries to beat back a surge in coronavirus cases, weeks away from the start of the Tokyo Olympics. Meanwhile, the more virulent delta variant has taken root in more than 100 countries, according to the World Health Organization, including those with high vaccination rates.

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Asian markets closed mostly in the red, with losses led by Hong Kong’s Hang Seng Index, which shed nearly 2.9 percent. European markets were down across the board in midday trading, with France’s CAC 40 dropping 2.4 percent, the pan-European Stoxx 600 off 1.8 percent and the German Dax down 1.9 percent.

A day after notching record highs, futures tied to the S&P 500 and tech-heavy Nasdaq are pointing to 1.3 percent drops at the open. Dow Jones industrial average futures are off 1.4 percent.

Companies whose fates are heavily tethered to the recovery saw their shares sink premarket Thursday: Carnival stock fell more than 3.7 percent in early trading, and American Airlines sank 3.3 percent. Big banks, like JPMorgan Chase, also flashed red.

“The mood in the markets is starting to sour,” Sophie Griffiths, market analyst with OANDA, wrote in commentary Thursday. “Concerns over the health of the economic recovery are denting risk sentiment and hitting demand for stocks even as the Federal Reserve moves towards tapering asset purchases.”

Labor market woes are a chief concern: Job openings are at a record high according to the Labor Department, which reported more than 9.2 million open positions as employers struggle to find workers amid a rush in summer business activity.

“Fresh job losses are not the major issue that they were earlier in the pandemic,” Mark Hamrick, senior economic analyst at Bankrate.com, said in commentary earlier this week. “Of more concern at present is the still heightened level of unemployment, the dampened level of labor force participation and continuing challenges for employers who want to add workers.”

The 10-year U.S. Treasury sank to its lowest level since February in early trading Thursday as investors sought shelter from volatility, before ticking slightly higher to 1.29 percent. Bond yields move inversely to prices.

Gold, another investor safe-haven, rose nearly .84 percent to trade at $1,817 per ounce.

Fears of covid’s looming threat to global travel pushed oil markets lower, with brent crude, the international oil benchmark, falling 0.2 percent to $73.27 a barrel. West Texas intermediate crude, the U.S. benchmark, declined 0.4 percent to $71.94.

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