U.S. stock indexes got rocked on Monday, with the major benchmarks ringing up losses of at least 7% and marking their worst daily declines in years, as the eruption of an oil-price war between OPEC and Russia and rising coronavirus fears sparked heavy losses across global equity markets.
Steep losses in early trade triggered a rarely used circuit breaker that temporarily halted trading across stock markets.
What are major indexes doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.04% closed down 2,013.76 points, or 7.8%, at 23,851.02, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.24% fell 225.81 points, or 7.6%, to end at 2,746.56, near its session low. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.43% plunged 624.94 points, or 7.3%, to finish at 7,950.68. All three benchmarks suffered their biggest one-day percentage declines since 2008.
What’s driving the market?
U.S. stocks markets closed near bear-market territory, defined as fall of 20% from a recent peak, on Monday, fittingly on the 11th anniversary of the bull market that began March 9, 2009.
A combination of growing concerns about the COVID-19 outbreak, amplified by a powerful selloff in crude-oil prices and energy-related companies amplified the markets lurch lower.
“The slide in the oil price, along with further outbreaks of coronavirus across Europe, and the Italian government imposing a lock down across northern Italy and in around the Milan region, has accelerated the rush for the exits in stock markets sending U.S. bond yields to new record lows,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
West Texas Intermediate crude for April delivery ended down 25% at $31.13 a barrel, while May Brent crude , the global benchmark, tumbled 24% to $34.36 a barrel. Both grades notched their sharpest one-day declines since the 1991 Gulf War.
The slump for crude came after a 10% drop on Friday after talks between the Organization of the Petroleum Exporting Countries and their allies collapsed, with Russia refusing to agree to a Saudi-led plan for additional crude production cuts. In response, Saudi Arabia over the weekend slashed crude prices and is preparing to increase production, in a direct attack against Russia’s market share, The Wall Street Journal reported .
Goldman Sachs analysts on Sunday said a price war could push crude prices toward $20 a barrel, especially as the economic slowdown caused by the coronavirus outbreak slows global demand. Those price levels “will start creating acute financial stress and declining production from shale as well as other high-cost producers,” Goldman warned.