9th March, 2020
US stocks suffered their biggest one-day loss since the 2008 financial crisis on Monday as recession worries loomed large in the wake of tumbling oil prices and ongoing coronavirus fears.
The combination of factors prompted investor panic on the anniversary of the U.S. stock market’s longest-ever bull run.
All three major U.S. stock averages plunged sharply at the opening bell, triggering trading halts put in place in the wake of 1987’s “Black Monday” crash. The Dow plummeted a record 2,000 points out of the starting gate on the day marking the current bull market’s 11th year.
During the session, the Dow came about a 10th of a percent from confirming a bear market, or 20% below its record peak.
The S&P 500 closed about 19% below its all-time high set on Feb. 19.
The Dow Jones Industrial Average fell 2,013.76 points, or 7.79%, to 23,851.02, the S&P 500 lost 225.81 points, or 7.60%, to 2,746.56 and the Nasdaq Composite .IXIC dropped 624.94 points, or 7.29%, to 7,950.68.
All 11 major sectors of S&P 500 ended the session deep in red territory, with energy and interest rate-sensitive financial stocks suffering the largest percentage losses.
“It’s certainly one for the history books,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “The markets are now pricing in a high probability of recession.”
Peter Cardillo, chief market economist at Spartan Capital Securities in New York, agreed.
“There’s a lot of fear in the market and if the price of oil continues to move lower it’s an indication that a global recession is not far away,” Cardillo said.
The CBOE Volatility index , a gauge of investor anxiety, touched its highest level since December 2008.
Benchmark 10-year U.S. Treasury yields briefly sank to 0.318%, a record low.
The sell-off began over the weekend when an oil supply pact between Saudi Arabia and Russia collapsed and both countries vowed to hike production amid weakening global demand due to the coronavirus and signs of an economic slowdown.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020. REUTERS/Bryan R Smith
Oil prices registered their biggest one-day fall since the 1991 Gulf war, with Brent crude futures LCOc1 closing down 23.88% and front-month WTI falling 25.1%. That sent the S&P Energy index .SPNY sliding 20.1%, its largest one-day drop on record.
Global markets were already on edge as worldwide confirmed cases of COVID-19 surged past 110,000, causing widespread supply disruption and large-scale quarantine measures as governments scramble to contain the outbreak.