Dow Suffers Worst One-Day Decline since 2008 as Coronavirus Fears Spread and Oil Prices Plummet

POLITICS & POLICY
The closing numbers on the floor of the New York Stock Exchange in New York City, March 9, 2020. (Bryan R Smith/Reuters)

Stocks fell over 7 percent on Monday in the Dow’s worst one-day decline since 2008, driven by fears of the economic impact of the Wuhan coronavirus and a drop in oil prices due to a price war between Russia and Saudi Arabia.

In all, the Dow dropped 2,014 points (7.8 percent), while the S&P 500 fell 7.6 percent and the Nasdaq Composite fell 7.3 percent. The stock market dropped so fast on Monday morning that trading was temporarily halted to stem the slide.

The Dow and Nasdaq finished Monday down 19 percent from record highs recorded earlier this year, while the S&P 500 had fallen 18 percent. The Trump administration is reportedly considering fiscal-policy measures to stimulate the economy.

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In addition to a rising number of confirmed cases of Wuhan coronavirus worldwide, a precipitous drop in crude oil to about $35 a barrel simultaneously weighed on global markets. Russia and OPEC nations on Saturday failed to agree on a coordinated plan for oil exports. Saudi Arabia responded by drastically lowering oil prices and raising production, leading Russia to do the same.

Yields on U.S. Treasury bonds also fell, in a sign that investors are seeking “safe haven” assets and perhaps expect further interest-rate cuts in response to reduced demand. Bond yields move inverse to prices. The turmoil comes six days after the Federal Reserve cut interest rates by 0.5 percent in an emergency measure.

“There has always been an assumption that when the oil price collapses the world is going to become a darker place, whether that is driven by the demand side or supply side,” Gregory Perdon, co-chief investment officer at private banking firm Arbuthnot Latham, told the Wall Street Journal.

Zachary Evans is a news writer for National Review Online. He is a veteran of the Israeli Defense Forces and a trained violist.

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