Premarket stocks: Investors start defending themselves as the race matures

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What’s Happening: The S&P 500 and Nasdaq Composite closed the two all-time highs Monday after shares of apple (AAPL), Owner of Google Alphabet (GOOGL), Facebook (FB) i Nvidia (NVDA) they all set new records.

But even as tech stocks continue their dizzying rise, some on Wall Street have decided it’s time to defend themselves.

Exchange-traded funds that follow the traditionally “defensive” sectors (health care, utilities and real estate) surpassed July and August.

He SPDR fund for the selected healthcare sector (XLV) has risen 7.5% so far this quarter, while the broader S&P 500 has risen 5.4%. He iShares US Utilities ETF (IDU) has risen by 7.7%, while the American real estate ETF iShares (IYR) has increased by 6.2%.

Companies that produce consumer commodities, which also gain momentum when investors turn to defense, have made quieter gains. The Consumer Staples Select Sector SPDR Fund has increased by 3% in July and August.

The Bank of America’s global fund managers survey released earlier this month noted this “more defensive” lean. Healthcare was the first sector among fund managers for the first time since November 2020.

What it means: As the contagious variant of the Covid-19 Delta throws fog into the economy, some investors may get nervous and think about how to protect their profits.

There are also indications that global growth is losing strength.

The Chinese economy stagnated in August, according to an official poll released on Tuesday. Manufacturing activity fell to 50.1 in August, from 50.4 in July. This was just above the 50-point mark indicating an expansion rather than a contraction, but it was still the slowest growth rate since the start of the pandemic.

The service industries, which now account for a larger share of the world’s second largest economy, went worse. The index of non-manufacturing purchasing managers fell to 47.5 from 53.3 in July, the first contraction since February 2020.

Investors don’t just watch China. In late July, Goldman Sachs cut its forecast for U.S. economic activity during the second half of the year, noting a slow consumer spending on services as well as the threat of the Delta strain. (Not to mention inflation and what the Federal Reserve does next).

Step back: Ryan Detrick of LPL Financial told customers this week that the S&P 500 hasn’t had a 5% drop once this year. This usually happens three times a year on average. It is not surprising, then, that at this time of concentration, with risks on the horizon, some on Wall Street become cautious.

Travel stocks are falling as Europe lowers U.S. travelers from the safe list

The European Union on Monday recommended that Americans be banned from traveling not essentially to their member states after an increase in Covid-19 cases in the United States, which affected the actions of airlines that have benefited of the gradual return of transatlantic voyages.

The details: It has been advised in the countries of the 27-nation bloc, which includes France, Italy and Germany, to re-establish coronavirus-related restrictions and curb the arrival of tourists from the United States and five other countries.

The guidelines are not binding, leaving the final decision in the hands of each EU country. But it is a blow to companies that had been planning a more sustainable return to travel after vaccination campaigns.

The measure could also have a negative impact on the bloc’s tourism-dependent economies, including Spain and Portugal.

Investor Information: Shares of U.S. airlines fell on Monday. Actions of United Airlines (UAL) fell 3.8% while American Airlines (AAL) fell 3.5% i Delta Air Lines (DE) threw 3.9%.

“United has worked closely with the EU and governing bodies around the world throughout the pandemic to reopen travel safely,” the airline said in a statement. “We will continue to monitor how Member States respond to this new orientation and keep our customers informed of any changes in their travel plans.”

European airlines were also hit on Tuesday. Shares of the British company Airways, IAG, fell 3.7% in the first operations in London, while the budget companies EasyJet (ESYJY) i Ryanair (RYAAY) lost 2.2% and 3.1%, respectively. Shares of Air France KLM fell 1.2% in Paris.

Is the Zoom era over?

Since the beginning of the pandemic, video conferencing has become an integral part of millions of lives around the world. And the name of a company has been synonymous with the boom: Zoom.

But the company’s latest earnings report, released after U.S. markets closed on Monday, indicates that the new generation of Zoom may be tired of all the screen time.

The first: Video zoom (ZM) recorded revenue of more than $ 1 billion for the first time in the second quarter, up 54% year-on-year. But he warned that a slowdown in demand would come as some workers returned to the office and resumed business travel.

“We feel good that people are moving around the world, but it’s certainly creating some headwinds, as we said, in the online segment of our business,” Kelly Steckelberg, the company’s chief financial officer, said in a call with analysts. This reduction in demand is occurring “a little faster than we expected,” he added.

Shares are down 12% in premarket trading on Tuesday.

Zoom out: The ubiquity of Zoom over the past 18 months has caused its stock to grow. Shares have gained more than 400% since early 2020. But despite the spread of the Delta variant, the growing desire for a return to (modified) normalcy will make this trajectory very difficult to maintain.

Until next time

NetEase (DETECTOR) reports results before US markets open. CrowdStrike (CRWD) follows after closing.

Also today: U.S. consumer confidence data for August publications at 10 a.m. ET.

Coming Tomorrow: ADP’s latest private employment report is a crucial preview of the government’s official jobs report to be released on Friday.

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