An oil price war sent already anxious financial markets into a dive Monday, with stocks dropping and crude prices collapsing in a worldwide selloff that fueled fears of a coronavirus-prompted economic recession.pushed oil prices to their biggest declines in nearly 30 years, major U.S. stock indexes sank more than 7%, falling so intensely in the morning that they triggered a temporary halt in trading.
Monday was the 11th anniversary of the stock market’s bull rally that began during the financial crisis in 2009, and stocks had reached record highs only last month.Over the weekend, Russia refused to cut oil production despite falling demand from China, whose economy has been slammed by the coronavirus outbreak. In response to Russia’s refusal, Saudi Arabia moved to drop oil prices and boost its own oil output.
The S&P 500 opened with a drop of 7% that triggered one of the so-called circuit breakers that U.S. financial regulators put in place following the market’s crash in October 1987. The circuit breakers, which are rarely needed, temporarily stop the cascade of sell orders and give investors a chance to catch their breath.
All three indexes are down 19% from their record highs. That puts them dangerously close to entering bear-market territory, which is defined as a sustained 20% drop from their most recent peaks. Some retail stocks defied the selloff. Dollar Tree was up 4.1% and AutoZone gained 5%. Shares of Clorox, which makes disinfecting products that are popular with people worried about coronavirus, rose nearly 1%.
“The guidance for long-term investors remains intact — do not panic,” McBride said in a note Monday. “As the uncertainty persists, the market frenzy will continue, perhaps for weeks, perhaps for months.”
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