Dow Experiences Worst Drop Since 2008 Amid Coronavirus Worries, Oil Plunge
After moving sharply lower at the start of trading on Monday, stocks saw substantial weakness throughout the session. With the steep drop on the day, the Dow tumbled to its lowest closing level in over a year.
In its worst day since 2008, the Dow plummeted 2,013.76 points or 7.8 percent to 23,851.02. The Nasdaq plunged 624.94 points or 7.3 percent to 7,950.68 and the S&P 500 tanked 225.81 points or 7.6 percent to 2,746.56.
The sell-off on Wall Street came amid lingering concerns about the economic impact of the coronavirus outbreak as well as substantial decrease by the price of crude oil.
According to reports, roughly 110,000 people have been infected with the coronavirus worldwide and more than 3,800 have died from the disease.
The price of crude oil for April delivery plummeted $10.15 to $31.13 a barrel amid indications of a price war between Saudi Arabia and Russia.
Saudi Arabia announced a massive cut to its official selling prices for April and reportedly plans to increase oil production.
The move by Saudi Arabia comes after OPEC and its allies failed to reach an agreement on additional production cuts last week.
Substantial weakness in overseas markets also generated selling pressure on Wall Street, with stocks across Europe and Asia moving sharply lower.
Trading was halted for fifteen minutes shortly after the open, as the S&P 500 plunged more than 7 percent, triggering a key market circuit breaker.
Energy stocks showed a particularly substantial move to the downside on the day amid the steep drop by the price of crude oil.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged 31.7 percent, the NYSE Arca Oil Index plummeted by 21.3 percent and the NYSE Arca Natural Gas Index tumbled by 18.8 percent.
Considerable weakness was also visible among banking stocks, as reflected by the 13.9 percent nosedive by the KBW Bank Index. The index sank to its lowest closing level in over three years.
Steel, brokerage, transportation and chemical stocks also saw significant weakness, moving sharply lower along with most of the other major sectors amid a broad based sell-off.
In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Monday. Japan’s Nikkei 225 Index plunged by 5.1 percent, while China’s Shanghai Composite Index tumbled by 3 percent.
The major European markets also showed substantial moves to the downside on the day. While the French CAC 40 Index plummeted by 8.4 percent, the German DAX Index and the U.K.’s FTSE 100 Index nosedived by 7.9 percent and 7.7 percent, respectively.
In the bond market, treasuries have pulled back well off their best levels of the day but remain in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 12.4 basis points at 0.582 percent.
Developments regarding oil prices and the coronavirus outbreak are likely to remain in focus on Tuesday amid another quiet day on the U.S. economic front.
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