COVID-denying sentiment reminds me of the mayor in the movie Jaws, who downplayed the shark and insisted on keeping the beaches open. We know how that turned out.

Economic and earnings data have been positive in recent weeks, outweighing investor fears about the pandemic. But…cue the theme by John Williams. COVID Delta lurks on the horizon like a menacing dorsal fin.

Overall, I’m optimistic about the stock market and expect further share price appreciation in the second half of 2021. However, you should take precautions in case the pandemic worsens to the point where it impedes the recovery and triggers a sell-off.

States with low vaccination rates and lax public health policies are experiencing alarming surges in cases of the highly contagious Delta variant. Below, I’ll show you how to stay invested and simultaneously reduce risks.

Blockbuster jobs data…

Let’s start with the good news. Last Friday’s jobs report blew a lot of minds (in a good way) on Wall Street, generating further momentum for the stock market rally.

The U.S. Bureau of Labor Statistics stated in its report: “Total nonfarm payroll employment rose by 943,000 in July, and the unemployment rate declined by 0.5 percentage point to 5.4 percent. Notable job gains occurred in leisure and hospitality, in local government education, and in professional and business services.”

Analysts greeted the data with elation, as reflected by this tweet posted by a prominent economist who’s a professor at the University of Michigan:

In the wake of the blockbuster jobs report, the Dow Jones Industrial Average and the S&P 500 closed at record highs Friday. However, the tech-heavy NASDAQ fell, pressured by the sharp rise in the 10-year Treasury yield to 1.31%.

Rising rates weigh on the current value of future earnings. This dynamic is even more adverse for high-growth equities, notably technology stocks. That’s because tech stocks typically have rapid growth assumptions baked into their share prices.

For the week, though, the three major U.S. stock market indices finished in positive territory (see chart).

European stocks also finished the week higher, while Asian markets were mixed as Beijing’s heavy-handed regulatory moves and the spread of COVID Delta dampened sentiment in the region.

In pre-market futures trading Monday, U.S. stocks were mixed. All eyes are on President Biden’s $1.2 trillion infrastructure package, which cleared an important procedural vote Sunday in the Senate and is slated for a final vote in Congress this week. Wall Street generally embraces the bill and its passage should provide a long-term tailwind for stocks.

Surprises on the upside…

Another tailwind is the better-than-expected corporate earnings season. More S&P 500 companies are beating earnings per share (EPS) estimates for second quarter 2021 than average, and beating EPS estimates by a wider margin than average, according to data from FactSet.

As of this writing, 89% of S&P 500 companies have reported actual results for Q2 2021. Among these companies, 87% have reported actual EPS above estimates, which exceeds the five-year average of 75% (see chart, compiled with data as of market close August 6).

If 87% turns out to be the final percentage for the quarter, it will mark the highest percentage of S&P 500 companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008.

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Companies in aggregate are reporting earnings that are 17.1% above estimates, which far exceeds the five-year average of 7.8%.

The blended EPS growth rate for Q2 is 88.8% today, compared to an earnings growth rate of 85.1% last week and an earnings growth rate of 63.0% at the end of the second quarter (June 30). “Blended” combines actual results for companies that have reported and projected results for companies that have yet to report.

If 88.8% materializes as the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth reported by the index since Q4 2009 (109.1%).

Safe harbors…

The stock market pessimists have been proven wrong this year, time and again. The rally is alive and well. That said, COVID Delta remains a threat. It’s difficult to quantify the financial danger of the variant, but like a persistent Great White, it’s out there.

If you’d like to reduce risk and also stay in the investment game, we’ve pinpointed five safe, high-yield stocks. These stocks have weathered every dip and crash over the last 20 years and still hand out steady, reliable income.

You don’t have to be an income investor to love dividend-paying stocks. Dividend-payers are time-proven vehicles for long-term wealth building, but they’re also safe harbors in treacherous waters because companies with robust and rising dividends by definition boast the strongest fundamentals.

If a company has the low debt and healthy cash flow required to throw off juicy dividends, it follows that the balance sheet is intrinsically sound enough to sustain the firm through corrections. We’ve singled out five of the best dividend stocks available.

One of these stocks is an infrastructure play that will greatly benefit if, as expected, the bipartisan Build Back Better plan passes this week. To learn more about our five high-yielding stocks, click here.

John Persinos is the editorial director of Investing Daily. Send your questions or comments to mailbag@investingdaily.com. To subscribe to his video channel, follow this link.