A television screen headlines news as traders prepare for the day’s activity on the floor of the New York Stock Exchange, Monday, March 9, 2020. Trading in Wall Street futures has been halted after they fell by more than the daily limit of 5%. (AP Photo/Richard Drew)

A television screen headlines news as traders prepare for the day’s activity on the floor of the New York Stock Exchange, Monday, March 9, 2020. Trading in Wall Street futures has been halted after they fell by more than the daily limit of 5%. (AP Photo/Richard Drew)

Stocks slide on Wall Street over coronavirus and oil crash

The slide triggered the first automatic halt in trading in over two decades

Stocks went into a steep slide Monday on Wall Street as a combination of coronavirus fears and a crash in oil prices spread alarm through the market, triggering the first automatic halt in trading in over two decades to let investors catch their breath.

The price of oil sank nearly 20% after Russia refused to roll back production in response to falling demand and Saudi Arabia signalled 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 U.S.

The clash between the two giant oil producers came as Italy — the country hit hardest by the coronavirus in Europe — began enforcing a lockdown against 16 million people in the north, the heart of its manufacturing and financial industries. The turmoil is expected to push Italy into recession and weigh on the European economy.

U.S. stocks edged closer to a bear market, defined as a drop of 20% from a record, while a gauge of fear on Wall Street reached its highest level since the 2008 global financial crisis.

European markets entered a bear market, closing the day with their heaviest losses since the darkest days of the 2008 meltdown. Italy’s index plunged 11.2%. Britain, France and Germany were down between 7.3% and 8.4%

Yields on U.S. Treasury bonds plunged to more record lows as investors kept on sinking money into seemingly safer places, even as the return on their investment sank closer and closer to nothing.

ALSO READ: COVID-19 concerns up odds Bank of Canada will cut rates, economists say

On Wall Street, the S&P 500 plunged 7.4% in the first few minutes after the opening bell before trading was halted by the market’s circuit breakers, first adopted after the crash of October 1987 and modified over the years. After the 15-minute pause, stocks trimmed their losses but were still down 5.7% in the early afternoon.

The Dow Jones Industrial Average lost 1,593 points, or 6.2%, to 24,275 after briefly being down more than 2,000. The Nasdaq gave up 5.1%.

The market-wide circuit breakers have been triggered only once before, in 1997.

The carnage in the energy sector was particularly bad. With benchmark U.S. crude dropping to under $34 a barrel, Marathon Oil, Apache Corp. and Diamondback Energy each sank more than 40%. Exxon Mobil and Chevron were on track for their worst days since 2008.

“We knew it was going to be a hot day,” said John Spensieri, head of U.S. equity trading at Stifel. He said that the mood was “organized chaos” in the morning but that the trading halt achieved what it was supposed to by stopping the slide.

The coronavirus has infected more than 110,000 people worldwide and killed around 3,900, leading to factory shutdowns, travel bans, closings of schools and stores, and cancellations of conventions and other gatherings.

ALSO READ: Toilet paper panic hits Greater Victoria as shoppers prep for threat of COVID-19

While the crisis has eased in China, where the virus was first detected, fast-growing clusters have turned up in South Korea, Iran and Italy, and fears are mounting in the United States, where a giant cruise ship idling off the California coast with at least 21 infected people aboard was scheduled to dock in Oakland on Monday so that the thousands on the vessel could be whisked to U.S. military bases or their home countries for a 14-day quarantine.

After initially taking an optimistic view on the virus — hoping that it would remain mostly in China and cause just a short-term disruption — investors are realizing they probably underestimated the crisis badly.

Including Monday’s drop, the S&P 500 has now lost 18% since setting a record last month. If it hits a 20% drop, it would mean the death of what’s become the longest-running bull market for U.S. stocks in history, an 11-year run. Monday marks the 11th anniversary of the market hitting bottom after the 2008 financial crisis.

The yield on the 10-year Treasury note plunged to 0.59%. Early last week, it had never been below 1%.

Traders are increasing betting that the Federal Reserve will cut interest rates back to zero to do what it can to help the virus-weakened economy, perhaps as soon as next week.

But doubts are rising about how effective lower rates can be this time. They can encourage people and companies to borrow, but they can’t restart factories, restaurants or theme parks shut down because people are quarantined.

The Fed has already cut its benchmark short-term rate to a range of 1% to 1.25%, leaving little room to cut more.

“Central banks are a bit player in the current crisis,’’ Ethan Harris, global economist at Bank of America, wrote in a research report.

The clamour is growing louder for help from authorities besides central banks.

“Today’s market action may bang some heads together and actually start thinking about the constructive measures the government can take,’’ said Jacob Kirkegaard, senior fellow at the Peterson Institution for International Economics.

Among other things, Kirkegaard said, the government should make sure all Americans get paid sick leave and health care coverage for virus-related ills.

___

AP Business Writer Damian J. Troise and AP Economics Writer Paul Wiseman contributed.

Stan Choe, The Associated Press

Like us on Facebook and follow us on Twitter

Coronavirus

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Nick Warmerdam and his dog Diesel are inviting locals to check out the Lakeland Farm U-pick Flower Farm this spring. (Ben Lypka/Abbotsford News)
VIDEO & SLIDESHOW: Abbotsford’s Lakeland Flowers opens for spring

Tulip farm attraction opened on April 14, open to the public daily seven days a week

A man holds a child while speaking with RCMP following an erratic driving incident on Highway 1 in Chilliwack on Friday, April 16, 2021. The child and a woman (but not this man) were in this Jeep Grand Cherokee which hit a barrier and a parked car on Highway 1 and continued driving. The vehicle finally exited the highway at Yale Road West and came to a stop. (Jenna Hauck/ Chilliwack Progress)
Video captures woman driving erratically with child after hitting barrier, car on Hwy 1 in Chilliwack

Smoke seen coming from SUV as it continues to travel eastbound of shoulder of highway

Video image
UPDATE: Bridge traffic moving normally after high-velocity crash involving logging truck

Northbound crash occurred at approximately 2 p.m., involves 6 vehicles, north lanes shut down

An undated picture of the Hope Station House. (Photo/Save The Hope Station House)
Hope council must consider all options for Station House: B.C. Ombudsperson

Investigation ‘revealed flaws in District’s process,’ statement said

The West Coast Women’s Show is among numerous events held annually at Tradex in Abbotsford. (Abbotsford News file photo)
Show producers start petition against city’s call for Tradex proposals

Abbotsford site should remain as events facility, petition states

Rainbow trouts thrashing with life as they’re about to be transferred to the largest lake of their lives, even though it’s pretty small. These rainbows have a blue tinge because they matched the blue of their hatchery pen, but soon they’ll take on the green-browns of their new home at Lookout Lake. (Zoe Ducklow/News Staff)
VIDEO: B.C. lake stocked with hatchery trout to delight of a seniors fishing club

The Cherish Trout Scouts made plans to come back fishing soon

Royal Inland Hospital in Kamloops. (Dave Eagles/Kamloops This Week file photo)
RCMP intercept vehicle fleeing with infant taken from Kamloops hospital

The baby was at the hospital receiving life-saving care

Premier John Horgan receives a dose of the AstraZeneca COVID-19 vaccine at the pharmacy in James Bay Thrifty’s Foods in Victoria, B.C., on Friday, April 16, 2021. THE CANADIAN PRESS/Chad Hipolito
B.C. Premier John Horgan gets AstraZeneca shot, encourages others

27% of residents in B.C. have now been vaccinated against COVID-19

Former Pitt Meadows city councillor David Murray was convicted of sex assault, and is now being sued by the victim. (files)
Former Pitt Meadows city councillor sued for sex assault

David Murray was convicted in 2017 of sexually assaulting a teen 25 years earlier

Vancouver Police Const. Deepak Sood is under review by the Independent Investigations Office of B.C. after making comments to a harm reduction advocate Sunday, April 11. (Screen grab)
VIDEO: Vancouver officer convicted of uttering threats under watchdog review again

Const. Deepak Sood was recorded Sunday saying ‘I’ll smack you’ and ‘go back to selling drugs’ to a harm reduction advocate

Provincial health officer Dr. Bonnie Henry prepares a daily update on the coronavirus pandemic, April 21, 2020. (B.C. Government)
B.C.’s COVID-19 infection rate persists, 1,005 new cases Friday

Hospitalization up to 425, six more virus-related deaths

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

The Nautical Dog Cafe at Skaha marina is getting its patio ready in hopes Mother Nature will provide where provincial restrictions have taken away indoor dining. (Facebook)
‘A lot of instability’: B.C. restaurants in layoff limbo

As COVID-19 cases stay high, restaurants in British Columbia are closed to indoor dining

Prime Minister Justin Trudeau looks on as Deputy Prime Minister and Finance Minister Chrystia Freeland responds to a question during a news conference on Parliament Hill in Ottawa, Tuesday, Aug. 18, 2020. THE CANADIAN PRESS/Adrian Wyld
Expectations high as Trudeau Liberals get ready to unveil first pandemic budget

The Liberals will look to thread an economic needle with Monday’s budget

Most Read