By STAN CHOE
NEW YORK (AP) – Fear assaulted financial markets around the world on Monday, and stocks, bond yields and oil plunged into metastatic concerns over the effects of the new coronavirus.
The most severe declines came from the oil markets, where prices reached more than 20%. But the movements in stocks and bond yields were almost as breathtaking. In the United States, the S&P 500 fell 7.4% in the first trading minutes and the losses were so large that trading was temporarily halted. The stocks reduced their losses after the shutdown, and the index was down 5.5% at 10:25 a.m. EST.
The Dow Jones Industrial Average lost 1,442 points, or 5.5%, to 24,434 after briefly losing more than 2,000. The Nasdaq fell 5.3%.
The carnage in the energy sector was particularly striking. Occidental Petroleum, Marathon Oil, Apache Corp. and Diamondback Energy each sank more than 40%. Exxon Mobil and Chevron were on the right track for their worst days since 2008.
European stocks fell more than 6%. Treasury bill yields hit a record low as investors delve into everything that seems safe, even if it pays closer to nothing every day.
Any sale is the result of fear of the unknown. As COVID-19 spreads around the world, many investors feel powerless to try to estimate how much it will hurt the economy and corporate profits, and the simplest answer to such uncertainty might be to get out. After initially adopting an optimistic view of the virus – hoping that it would remain mainly confined to China and cause only short-term disruption – investors realize that they have probably underestimated it.
The virus has infected more than 110,000 people worldwide, and Italy followed China’s example on Sunday by quarantining much of its country in hopes of stopping the spread. This raised more fears that quarantines would scold companies’ supply chains even more than they already have.
The new coronavirus is now spreading to all continents except Antarctica and is hurting consumer spending, industrial production and travel.
The S&P 500 has lost 17% since setting a record last month. If it falls 20%, it would mean the death of what has become the oldest bull market in US stocks in history. Monday actually marks the 11th anniversary of the market’s downturn after the 2008 financial crisis.
The breaker on the US stock market is supposed to slow things down and give investors a chance to breathe before they trade more.
The 10-year Treasury bill yield plunged to 0.54%, down sharply from 0.70% on Friday evening. At the start of last week, it had never been below 1%.
Short-term yields fell as traders increasingly bet that the Federal Reserve would cut rates to do what it could to help the economy. The two-year Treasury yield, which is moving more in line with Fed expectations, fell to 0.33% from 0.46%.
The Federal Reserve and other central banks around the world have provided the ultimate safety net in the past during this bull market, supporting the markets with rate cuts and other stimulus. But doubts are increasing as to the effectiveness of the lower rates this time. They can encourage people and businesses to borrow, but they cannot restart factories, restaurants, or theme parks that are closed because people are quarantined.
Crude oil Brent, the international standard, lost $ 8.60, or 19%, to $ 36.67 a barrel. US benchmark crude oil fell from $ 7.16 to $ 34.12.
Investors were already dropping oil due to fears that a global economy weakened by viruses would use less fuel. But concerns over the supply dropped the latest fake on the market on Monday. Reports that Saudi Arabia could increase oil production to gain market share have raised fears that the world will soon be inundated with too much oil.
By STAN CHOE
NEW YORK (AP) – Fear assaulted financial markets around the world on Monday, and stocks, bond yields and oil plunged into metastatic concerns over the effects of the new coronavirus.
The most severe declines came from the oil markets, where prices reached more than 20%. But the movements in stocks and bond yields were almost as breathtaking. In the United States, the S&P 500 fell 7.4% in the first trading minutes and the losses were so large that trading was temporarily halted. The stocks reduced their losses after the shutdown, and the index was down 5.5% at 10:25 a.m. EST.
The Dow Jones Industrial Average lost 1,442 points, or 5.5%, to 24,434 after briefly losing more than 2,000. The Nasdaq fell 5.3%.
The carnage in the energy sector was particularly striking. Occidental Petroleum, Marathon Oil, Apache Corp. and Diamondback Energy each sank more than 40%. Exxon Mobil and Chevron were on the right track for their worst days since 2008.
European stocks fell more than 6%. Treasury bill yields hit a record low as investors delve into everything that seems safe, even if it pays closer to nothing every day.
Any sale is the result of fear of the unknown. As COVID-19 spreads around the world, many investors feel powerless to try to estimate how much it will hurt the economy and corporate profits, and the simplest answer to such uncertainty might be to get out. After initially adopting an optimistic view of the virus – hoping that it would remain mainly confined to China and cause only short-term disruption – investors realize that they have probably underestimated it.
The virus has infected more than 110,000 people worldwide, and Italy followed China’s example on Sunday by quarantining much of its country in hopes of stopping the spread. This raised more fears that quarantines would scold companies’ supply chains even more than they already have.
The new coronavirus is now spreading to all continents except Antarctica and is hurting consumer spending, industrial production and travel.
The S&P 500 has lost 17% since setting a record last month. If it falls 20%, it would mean the death of what has become the oldest bull market in US stocks in history. Monday actually marks the 11th anniversary of the market’s downturn after the 2008 financial crisis.
The breaker on the US stock market is supposed to slow things down and give investors a chance to breathe before they trade more.
The 10-year Treasury bill yield plunged to 0.54%, down sharply from 0.70% on Friday evening. At the start of last week, it had never been below 1%.
Short-term yields fell as traders increasingly bet that the Federal Reserve would cut rates to do what it could to help the economy. The two-year Treasury yield, which is moving more in line with Fed expectations, fell to 0.33% from 0.46%.
The Federal Reserve and other central banks around the world have provided the ultimate safety net in the past during this bull market, supporting the markets with rate cuts and other stimulus. But doubts are increasing as to the effectiveness of the lower rates this time. They can encourage people and businesses to borrow, but they cannot restart factories, restaurants, or theme parks that are closed because people are quarantined.
Crude oil Brent, the international standard, lost $ 8.60, or 19%, to $ 36.67 a barrel. US benchmark crude oil fell from $ 7.16 to $ 34.12.
Investors were already dropping oil due to fears that a global economy weakened by viruses would use less fuel. But concerns over the supply dropped the latest fake on the market on Monday. Reports that Saudi Arabia could increase oil production to gain market share have raised fears that the world will soon be inundated with too much oil.