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Stocks Drop Amid Delta Variant Concerns — What Market Analysts Are Saying

Shannon Stapleton | Reuters

U.S. stocks fell Monday on concerns a rebound in Covid-19 cases would slow global economic growth.

The selling picked up as the session continued with the Dow Jones Industrial Average on track for its biggest drop of the year. Here's what experts are watching now.

Michael Yoshikami, CEO of Destination Wealth Management, saw a few factors in play.

"I think it's a big threat but I think that more so I think there's really a gathering of multiple headwinds. There's potential income tax increases, there's really perhaps excess enthusiasm in the market at this point given how valuations have been stretched, and I think there's really just way too much euphoria, in my view, that the economy is going to open wide open. Try to book a ticket to Asia right now, see what's happening in Japan in terms of the Olympics. So I think the delta variant as well as these other issues are going to cause some problems for the market. That's why we've been concerned and why we've been expecting a 10% correction."

Meghan Shue, head of investment strategy at Wilmington Trust, detailed what this means for markets outside the U.S.

"It's very important. We're watching it carefully. We don't think it's going to derail the cycle, we think this is a factor that's contributing to concerns that maybe our expectations for growth were too high. I also think the delta variant is much more of a concerning story outside of the U.S., particularly when you think about emerging markets and some areas of even the developed market complex that just don't have the supply and the rate of vaccine penetration that we have here in the U.S. So, I think if you were banking on and we have been banking on kind of that handoff from U.S. growth to non-U.S. growth, that story is really at risk when you think about the spread of the delta variants, but by and large I think policymakers are going to be focusing more on the vaccines than shutdowns."

Jim Cramer, host of CNBC's "Mad Money," said this is not a major threat to the bull run.

"All these athletes that are testing, they're obviously asymptomatic or else they wouldn't be crushing it right now. …. There's just so much fear in the market. And I just think that the asymptomatic is not as dangerous, the deaths are not going up that much, so I'm not buying that this is the end of the bull market. I'm saying that most of the companies that are involved with technology have been rolling over for days, maybe even weeks, and suddenly everyone's discovered that."

Mohamed El-Erian, Allianz chief economic advisor, shared three forces at work in the market.

"There's, first and foremost, concerns about growth, have we reached peak growth and is it coming down? There's concerns that the Fed is going to continue buying – you really want to get in the way of $120 billion of monthly purchases? And three, importantly, if you are a pension fund and you are now in a much more comfortable position because your stock component has gone up so much, you are going to liability manage. You can sell stocks and buy bonds and immunize your liabilities."

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