Trading in U.S. Stocks Tempora Oil Collapse Adds to Investors’ Problems:
Oil markets crashed and stocks plunged on Monday as a sudden clash among the world’s biggest oil producers gave already rattled investors another reason to worry about the global economy.
Five minutes into the trading day in the United States, the plunge in the S&P 500 hit 7 percent, triggering an automatic trading halt for 15 minutes. When trading resumed, the benchmark fell further, and was down slightly more than 7 percent at 9:50 a.m. in New York.
The next trading halt would come if the S&P 500 falls 13 percent.
Financial markets have whipped around for weeks as investors struggled to quantify the economic impact of the spreading coronavirus: stocks have tumbled, oil prices cratered, and yields on government bonds reflected a sense among investors that there was worse still to come.
But over the weekend, two of the world’s major oil producers, Saudi Arabia and Russia, added a new element to the mix by setting off a price war for crude. While low oil prices can be beneficial, they can also disrupt economies that depend heavily on petroleum dollars. The fall in oil prices since the start of the coronavirus also signals a global economic slowdown.
Oil lost nearly a quarter of its value in futures markets on Monday, dragging shares of energy companies lower. It was what one analyst called “another acute shock to markets.”
In Europe, major stock benchmarks were down more than 7 percent. Shares ended sharply lower in Asia also.
As stocks fell, investors seeking a safe harbor pushed yields on government bonds to historic lows. The yield on the closely watched 10 year U.S. Treasury bond, which falls as the price of the bonds rise, dropped below 0.5 percent, about half the level of just a week ago.
Even before the weekend’s developments, stocks in the United States and other major financial markets had fallen by more than 10 percent in a sudden downdraft that began as the coronavirus began to spread outside of China.
Problem globally is growing worse.
On Sunday, Italy took the dramatic step of locking down a large chunk of its industrial northern region. In the United States, a top government disease expert warned that regional lockdowns there might become necessary, though he played down the idea of tight quarantines like the kind China has enacted.