Usually, the biggest losers for any given month end up being a hodgepodge of different companies. This is not one of those times. July's worst-performing names among the S&P 500 (SNPINDEX:^GSPC) constituents were Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), Norwegian Cruise Line Holdings (NYSE:NCLH), and Carnival Corporation (NYSE:CCL). The commonality is clear. All are tourism plays, but more to the point right now, these companies have the most to lose if the recent increase in COVID-19 cases worsens. In this light, last month's steep sell-offs make a lot of sense.

Veteran investors know the time to step into quality stocks is when they've been needlessly beaten down, but sometimes, stocks are upended for all the right reasons. It's not always easy to determine which is which, and this is one of those tricky times.

Too late to stop it now

The sell-offs last month were steep. Carnival shares fell 17.9% with rival Norwegian Cruise Line seeing its shares slide 18.3%. Wynn Resorts stock fell 19.6%, matching the loss logged by Las Vegas Sands. In all four cases, the selling simply extended pullbacks that first started taking shape in June.

WYNN Chart

Data by YCharts.

Now, investors face a key question: Will the growing number of global coronavirus cases exact the same toll taken in 2020, the first time the pandemic swept across the world?

Nobody really knows. From an odds-making perspective, though, it would be naive to believe something like the strict shutdowns we saw last year aren't a possibility if the situation continues to worsen.

The official guidance thus far is more hopeful. On Aug. 1, Dr. Anthony Fauci, Director of the U.S. National Institute of Allergy and Infectious Diseases, said the U.S. will not suffer lockdowns again, even though he believes the pandemic will indeed get worse in the U.S. before improving. Moreover, consumers and corporations alike have learned to operate in a world where COVID-19 is a threat, and many of the millions of vaccinated Americans are ready to venture out and live life despite the risks of doing so.

A medical professional administers a vaccine to a patient

Image source: Getty Images.

However, one should avoid assuming the U.S. response will match the worldwide reality. Within the past month, lockdowns have been mandated in Australia, China, Mexico, and Canada, while France and other European countries are raising the bar on who is allowed to travel to, from, and within the country.

And that's just a small sampling. A wide swath of the world is establishing or reinstating measures meant to curb the spread of the coronavirus as the global number of reported COVID-19 cases appears to be climbing back toward highs seen earlier this year.

Considering authorities must now deal with a highly contagious delta variant of the disease, lockdowns and other travel restrictions are a strong possibility in the remainder of 2021, and that is especially problematic for casino operators like Las Vegas Sands and Wynn and cruise lines like Carnival and Norwegian. Even a rapid, effective response in the U.S. could still leave these companies exposed to challenges in other regions of the world where they operate.

Not permanent but no flash in the pan either

So as it stands now, tourism and travel face a lot of near-term challenges. The full effects of the recent surge in cases may not be seen for months, and as shareholders in companies like Wynn and Carnival experienced in July, a lot of damage can happen to share prices in a short period of time.

The S&P 500's worst performers last month aren't bargains now as a result of their sell-offs. If anything, their declines are a sign of bigger issues that have yet to be resolved. Only true buy-and-hold investors should consider jumping into these stocks, and for the next few months, they should be prepared to stomach the continued volatility and growing uncertainty that lies ahead for this sector.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.