Wall Street rebounds a day after biggest decline of the year

Dow Jones Industrial Average rises 546 points

Dow takes worst hit of 2021, , falls by more than 700 points.The 2.7 percent drop that shook the Dow on July 19 is thought to represent investor reaction ... .... to news that the Delta variant has led to spikes of COVID-19 cases all over the U.S. .It was the most significant drop since Oct. of last year, when stocks fell 943 points.Shares of cruise and airline companies took the deepest hit as fears of a slower economic recovery spread.More concerning for analysts than a drop in stocks are possibilities of stagflations, .which is when economic growth slows in tandem with rising inflation.Fear of stagflation will be a major concern for investors if a resurgence in Covid infections causes economies to slow while consumer prices continue an upward trajectory, Peter Essele, Commonwealth Financial Network, via CNN.Investors recognize that stocks remain close to record highs, up nearly 10 percent this year overall.We do not expect a return to complete shut downs in the US so while the damage from the Delta variant can be significant, we are still in the 'buy the dip' camp, Bryce Doty, Sit Fixed Income Associates, via CNN

Stocks were higher in morning trading Tuesday, as investors shake off a rout from the day before brought on by concerns about the spread of a more contagious variant of COVID-19.

The S&P 500 index was up 1.3%. The Dow Jones Industrial Average rose 546 points or 1.6% to 34,508.19 and the Nasdaq composite was up 1%. On Monday the S&P 500 fell 1.6%, its biggest single-day drop since May.

The spread of the more contagious delta variant of COVID-19 has become a worry spot for investors and policymakers. While tens of millions of Americans have gotten vaccinated, there remains a significant percentage of Americans who are either reluctant or outright hostile to the idea of vaccinated.

Los Angeles Country last weekend reinstituted an indoor mask mandate as the region’s infection rate was climbing quickly yet again. Other parts of the country, like Southern Missouri, are flooded with COVID cases that are straining hospitals once again.

Bond yields fell sharply on Monday on fears that the strong economic recovery from the pandemic could be put at risk from additional lockdowns or coronavirus cases. The yield on the 10-year Treasury note rose to 1.20% from 1.18% the day before. Barely a week ago, the 10-year note was trading at a yield of 1.33%.

Wall Street is also in the midst of earnings reporting season. IBM rose more than 4% after the company reported better than expected revenue and profits, helped by its cloud computing business.