Dow Jones sinks 7.8% in steepest drop since 2008 financial crisis

National

Trader David O’Day works on the floor of the New York Stock Exchange, Friday, Feb. 28, 2020. Stocks are opening sharply lower on Wall Street, putting the market on track for its worst week since October 2008 during the global financial crisis. (AP Photo/Richard Drew)

NEW YORK (AP) — The Dow Jones Industrial Average sank 7.8%, its steepest drop since the financial crisis of 2008, as a free-fall in oil prices and worsening fears of fallout from the spreading coronavirus outbreak seize markets.

The sharp drop triggered the first automatic halts in trading in two decades. The price of oil plunged nearly 25% after Saudi Arabia indicated it would ramp up production after Russia refused to production cutbacks in response to falling demand. Europe fell into a bear market.

U.S. stocks are now down 19% from the peak they reached last month. Bond yields plumbed new lows as investors sought safety.


THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below:

Coronavirus fears and a crash in oil prices sent a shudder through financial markets Monday, with stocks plummeting so fast on Wall Street that they triggered the first automatic halt in trading in over two decades.

The Dow Jones Industrial Average plunged more than 2,000 points at one point during the day, or nearly 8%, and European markets entered a bear market, registering their heaviest losses since the darkest days of the 2008 meltdown, as the damage mounted from the crisis that has closed factories, schools and stores and led to travel bans and unprecedented quarantines.

“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, with masked police officers and soldiers checking travelers’ documents amid restrictions that affected such daily activities as enjoying a espresso at a cafe or running to the grocery store. The turmoil is expected to push Italy into recession and weigh on the European economy.

In the U.S., a cruise ship with a cluster of coronavirus cases that forced it to idle off the California coast for days arrived at the port of Oakland as officials prepared to start bringing passengers to military bases for quarantine or get them back to their home countries. The Grand Princess had more than 3,500 people aboard — 21 of them infected with the virus.

The escalating health crisis combined with another, intertwined development — plummeting oil prices — to drag down the market: The price of oil sank nearly 20% 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 U.S.

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 and modified over the years 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 was still down 6.9% in the late afternoon. The Dow was down 1,802 points, or 7%, to 24,062. The Nasdaq gave up 6.4%.

U.S. stocks edged ever closer to a bear market, defined as a drop of 20% from its peak, while a gauge of fear on Wall Street reached its highest level since the 2008 global financial crisis.

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