CNBC’s Pisani: “the markets have been acting like the virus has gone away”

2021 has been celebrative for investors so far as stocks recovered, sectors boomed, and indices were up. But all of that might be set to change with the rise of the new Delta variant – a glimpse of which has been evident since last week.

Another wave of COVID is not priced into the market

Another outbreak that could potentially weigh on the economy is not factored into the market. If the new COVID variants push the world towards another lockdown, companies will again start to be more cautious about their earnings guidance for the rest of the year.

According to CNBC’s Bob Pisani, the market narrative up until this week has been based on the following:

Some parts of the market are very oversold

What’s given is that the new COVID variants could potentially hurt earnings again, particularly for travel and leisure companies. It is, however, too soon to predict how strongly could investors take the hit in different sectors.

Pisani also highlights that some parts of the market are very oversold, resulting in the advance/decline line turning down this month. According to Stadium Capital’s Joe Zicherman:

At the time of writing, the benchmark S&P 500 index, Dow Jones Industrial Averages, and Nasdaq are down roughly 2% each compared to Monday, July 12^th.