Sponsored By
An organization or individual has paid for the creation of this work but did not approve or review it.

ADVERTISEMENT

ADVERTISEMENT

US stocks drop 7% as oil war and coronavirus fears slam markets

An oil price war triggered by the spreading coronavirus sent already anxious financial markets into chaos Monday, with stocks plunging and crude prices collapsing in a worldwide panic that threatens a global economic recession.

a7a384c409cb5ae2a4bd827eda72ace3.jpg
Traders on the floor react before the opening bell on the New York Stock Exchange on March 9, 2020 in New York. Trading on Wall Street was temporarily halted early March 9, 2020 as US stocks joined a global rout on crashing oil prices and mounting worries over the coronavirus.The suspension was triggered after the S&P 500's losses hit seven percent. Near 1340 GMT, the broad-based index was down more than 200 points at 2,764.21. (Timothy A. Clary/AFP via Getty Images/TNS)

WASHINGTON - An oil price war triggered by the spreading coronavirus sent already anxious financial markets into chaos Monday, with stocks plunging and crude prices collapsing in a worldwide panic that threatens a global economic recession.

The Standard & Poor's 500 index dropped 7% in the first minutes, triggering a 15-minute halt in trading. When trading resumed, stocks slumped a bit further and then regained a little of the lost ground. The S&P 500 was down 5.9% shortly before 7 a.m. Pacific time. The Dow Jones industrial average was down 6.3%, or about 1,630 points. The Nasdaq composite was down 5.7%.

Treasury yields fell to a new record low as investors fled for the safety of government bonds.

Overnight Asian financial markets plummeted, and European stocks were swooning Monday, in the wake of Saudi Arabia's move over the weekend to drop oil prices and boost output in an angry response to Russia's refusal to reduce production in the face of falling demand from China, whose economy has been slammed by the virus and efforts to contain it.

The price war caused about a 25% fall in crude prices, to the lowest level in almost 30 years, and the U.S. dollar fell as oil is priced and traded globally in dollars.

ADVERTISEMENT

While the collapse in oil will lower pump prices for American consumers, it will pressure U.S. crude producers and investments, and increases the risk to broader credit markets.

The Fed, which made an emergency cut in interest rates last week, moved early Monday to increase short-term funding to support the U.S. lending market.

"With the combination of the implications of the oil stand-off and the outbreak, I now believe that it's almost inevitable that there will be a global recession this year," said Nigel Green, chief executive of deVere Group, an independent financial advisory group.

---

(c)2020 Los Angeles Times

Visit the Los Angeles Times at www.latimes.com

Distributed by Tribune Content Agency, LLC.

ADVERTISEMENT

BIZ-MARKETS-GET

Related Topics: FINANCE
What To Read Next
Dozens of private well owners from five counties filed through the St. Charles Community Center on Thursday to learn more about a resource they use daily: water from their private wells.
The converted bus is a rolling blood donation center with equipment and staff ready to travel to sites in southeast Minnesota.
Keegan Bronson was diagnosed with cancer a few months ago. He's got an uphill battle, but he's too determined to let cancer derail his life.
Southeast Minnesota remains an area of low community transmission of COVID-19, but rates more than doubled in some counties last week, according to CDC data.