Stock indexes tumbled so fast Monday that trading on the New York Stock Exchange was halted temporarily for the first time since October 1997. The Dow Jones Industrial Average lost 2,013 points as fears grew over the economic impact of the coronavirus epidemic. The blue chip index fell nearly 7.8%, and the S&P 500 dropped 7.6%.
It was the worst day for the market since 2008, during the financial crisis.
The 15-minute trading halt — triggered automatically by a 7% drop in the S&P 500 — came shortly after the opening bell, when stocks tumbled in reaction to Saudi Arabia’s shocking oil price cut.
It was the first marketwide trading halt since the crash of Oct. 27, 1997, when the Dow fell 554 points, or 7.2%.
With Monday’s dive, the Dow and the S&P 500 are now down about 19% from their peaks in February. If the S&P 500 drops 20% from the recent peak, the stock market will be considered in bear market territory.
The financial market chaos comes amid increasing worries that the coronavirus epidemic will plunge the global economy into recession. Stocks also fell sharply in Asia and Europe.
The price of oil also fell — down about 25% Monday following the unexpected Saudi move.
As investors fled stocks and sought relative safety in government bonds, the yield on the benchmark 10-year Treasury note fell below 0.4% overnight before climbing above 0.5% during the day.
Over the weekend, Saudi Arabia announced a stunning discount in oil prices — of $6 to $8 per barrel — and a boost in production.
The move was a dramatic reversal from a few days earlier. Late last week, talks between OPEC and Russia collapsed after weeks of negotiations. The kingdom had tried but failed to get Russia to agree with OPEC to cut production to keep prices from falling in reaction to economic worries about the coronavirus.
The oil price war comes amid increasing fears that the coronavirus will hit the global economy hard as factories shut down, travel plans are canceled and spending grinds to a halt. In Italy’s industrial region, 16 million people are under quarantine as the country fights to control the coronavirus outbreak there.
Worldwide, there are more than 110,000 COVID-19 cases, including more than 7,000 each in South Korea, Italy and Iran, according to a dashboard created by Johns Hopkins University’s Whiting School of Engineering.