Dow drops 7.8% as fear slams markets
Stocks plummeted as a collapse in oil prices merged with mounting alarm over what the corona virus could do to theworldeconomy.
Stocks took their worst one-day beating on Wall Street since the global financial crisis of 2008 as a collapse in oil prices Monday combined with mounting alarm over what the coronavirus could do to the world economy.
The staggering losses, including a 7.8% tumble in the Dow Jones Industrial Average, immediately raised fears that a recession might be on the way in the U.S. and that the record-breaking 11-year bull market on Wall Street may be coming to an abrupt end in a way no one even imagined just a few months ago.
The drop was so sharp that it triggered the first automatic halt in trading in more than two decades. European stock indexes likewise registered their heaviest losses since the darkest days of the 2008 meltdown and are now in a bear market.
Together, the sell-offs reflected growing anxiety over the potential global economic damage from the coronavirus, which has infected more than 110,000 people worldwide and killed about 4,000 while prompting factory shutdowns, travel bans, closings of schools and stores, and cancellations of conventions and celebrations big and small.
“The market has had a crisis of confidence,” said Willie Delwiche, investment strategist at Baird.
The market slide came as Italy, the hardest-hit place in Europe, began enforcing a lockdown against 16 million people in the north, or onequarter of the country’s population, and then announced that travel restrictions would be extended nationwide. Premier Giuseppe Conte said all people will have to demonstrate a valid reason to travel beyond where they live.
The turmoil in Italy — marked by masked police officers and soldiers checking travelers’ documents and restrictions that affected such daily activities as enjoying an espresso at a cafe counter or running to the grocery store — is expected to push the country into recession and weigh on the European economy.
Elsewhere around the world, Ireland went so far as to cancel St. Patrick’s Day parades, and Israel ordered all visitors quarantined just weeks before Passover and Easter, one of the busiest travel periods of the year.
In the U.S., a cruise ship with a cluster of coronavirus cases that forced it to idle off the California coast for days docked at Oakland as officials prepared to start bringing passengers to military bases for quarantine or return them to their home countries. The Grand Princess had more than 3,500 people aboard, 21 of them infected.
The market was also dragged down by another, intertwined development: Oil prices plunged nearly 25% after Russia refused to roll back production in response to virus-depressed demand and Saudi Arabia signaled it will ramp up its own output.
While low oil prices can translate into cheaper gasoline, they wreak havoc on energy companies and countries that count on petroleum revenue, including the No. 1 producer, the United States.