INSUBCONTINENT EXCLUSIVE:
Stocks took their worst one-day beating on Wall Street since the global financial crisis of 2008 as a collapse in oil prices Monday combined
with mounting alarm over what the coronavirus could do to the world economy.
The staggering losses, including a 7.8% tumble in the Dow Jones
Industrial Average, immediately raised fears that a recession might be on the way in the United States and that the record-breaking 11-year
bull market on Wall Street may be coming to an abrupt end in a way no one even imagined just a few months ago.
The drop was so sharp that it
triggered the first automatic halt in trading in more than two decades
European stock indexes likewise registered their heaviest losses since the darkest days of the 2008 meltdown and are now in a bear
market.
Together, the sell-offs reflected growing anxiety over the potential global economic damage from the coronavirus, which has infected
more than 110,000 people worldwide and killed about 4,000 while prompting factory shutdowns, travel bans, closings of schools and stores,
and cancellations of conventions and celebrations big and small.
``The market has had a crisis of confidence,'' said Willie Delwiche,
investment strategist at Baird.
The market slide came as Italy, the hardest-hit place in Europe, began enforcing a lockdown against 16
million people in the north, or one-quarter of the country's population, and then announced that travel restrictions would be extended
Premier Giuseppe Conte said all people will have to demonstrate a valid reason to travel beyond where they live.
The turmoil in Italy _
marked by masked police officers and soldiers checking travelers' documents and restrictions that affected such daily activities as enjoying
an espresso at a cafe counter or running to the grocery store _ is expected to push the country into recession and weigh on the European
economy.
Elsewhere around the world, Ireland went so far as to cancel St
Patrick's Day parades, and Israel ordered all visitors quarantined just weeks before Passover and Easter, one of the busiest travel
periods of the year.
In the United States , a cruise ship with a cluster of coronavirus cases that forced it to idle off the California
coast for days docked at Oakland as officials prepared to start bringing passengers to military bases for quarantine or return them to their
The Grand Princess had more than 3,500 people aboard, 21 of them infected.
The market was also dragged down by another, intertwined
development: Oil prices plunged nearly 25% after Russia refused to roll back production in response to virus-depressed demand and Saudi
Arabia signaled 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 United States.
``People are very anxious and very uncertain
Then all of a sudden you throw in a wild card that we weren't expecting and people just went, `Ah!''' said Randy Frederick, vice president
of trading - derivatives at Charles Schwab.
He added: ``A recession and a bear market are both a very realistic possibility right
now.``
``The fear today is: Are the bears correct in talking about a recession around the corner from this?`` said Quincy Krosby, chief
market strategist at Prudential Financial
``Is this just about now? Is this just about the oil? Is this just about the virus? Or are we looking at a recession around the corner
because all of this?''
President Donald Trump met in the afternoon with Treasury Secretary Steven Mnuchin, economic adviser Larry Kudlow and
other aides about a range of economic actions he could take
He also invited Wall Street executives to the White House on Wednesday to discuss the economic fallout from the epidemic.
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 to give investors a chance to catch their breath
The market-wide circuit breakers have been triggered only once before, in 1997.
After the 15-minute pause, the S-P trimmed its losses, but
still closed 7.6% lower on the day
The Dow fell 2,013 points, or 7.8%, to 23,851.02
The Nasdaq gave up 7.3%.
The S-P 500 is now down 18.9% from the record high it set on Feb
19 and has lost $5.3 trillion in value during that time
United States stocks are now uncomfortably close to entering a bear market, defined as a drop of 20% from a peak.
Italy's stock index
Britain, France and Germany were down between 7.7% and 8.4%
The interest rate, or yield, on United States Treasury bonds sank to all-time
lows as investors looking for a safe place kept on sinking money into them, even as the return on their investment fell closer and closer to
The yield on the 10-year Treasury note plunged to 0.59%
Up until last week, it had never been below 1%.
The carnage in the energy sector was particularly bad
With benchmark United States crude dropping to under $32 a barrel, Marathon Oil, Apache Corp
and Diamondback Energy each plummeted more than 40%
Exxon Mobil had its worst day since 2008, while Chevron had its second-biggest drop ever.
``We knew it was going to be a hot day,'' said
John Spensieri, head of United States 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.
Despite the scary-looking red numbers flashing on CNBC and other news channels, some financial consultants advised ordinary investors
to stick to their long-term plan and not panic.
Scott Heydt, a financial consultant at Heydt Air, said he expects the market will go back to
normal, even though it could take a year or so
``It's definitely not a comfortable time,'' he said
``But people need to stop looking at their portfolios on their smartphones every two seconds if they don't have a stomach for it.''
For most
people, the coronavirus causes only mild or moderate symptoms, such as fever and cough
For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia
The vast majority of people recover from the virus, as has already happened with about three-quarters of those infected in China.
While the
crisis is easing in China, where the virus was first detected, fast-growing clusters have turned up in South Korea, Iran and Italy, and the
caseload is growing in the United States
The number of people infected in teh United States climbed to around 600, with 26 deaths, at least 19 of them associated with a single
Seattle-area nursing home.
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.
Traders are increasingly betting the
Federal Reserve will cut interest rates back to zero to help the virus-weakened economy
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 clamor 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.