The world’s faltering effort to contain the coronavirus outbreak led to a rout in stocks and crude oil on Monday, as new cases surfacing across the globe amplified fears of a downturn. Each of the three major indices dropped more than 7% by market close, with the Dow shedding more than 2,000 points.
The decline marked the largest one-day point loss for the Dow on record, and the largest single-session percentage hit since 2008. The S&P 500’s more than 7% drop was also the most since December 2008, led by stunning declines in the Energy and Financial sectors.
Worldwide cases of COVID-19 have topped 109,000 — with Italy emerging as the worst-hit country outside of China and the biggest in Europe, as new infections rise in the U.S. The Italian government’s move to quarantine its entire northern region raised new fears about the pathogen becoming a global pandemic, sending markets into a free-fall.
A grim offshore trading session turned into a full-fledged rout as equities sold off — which even a brief “circuit-breaker” trading halt couldn’t staunch. In the bond market, the benchmark U.S. 10-year Treasury interest rate fell to a new all-time low, with the entire yield curve falling below 1% during Monday’s session.
Brent crude (BZ=F) prices collapsed, falling by more than 30% on Sunday evening in what was the largest single-day drop since the U.S. invaded Iraq in 1991. Prices for Brent and West Texas intermediate crude oil each settled lower by more than 20% Monday.
OPEC’s failure last week to strike a deal to cut production prompted Saudi Arabia to lean in aggressively on cheaper oil prices, which fanned concerns about a full-fledged price war that sent oil into free-fall. Investors appeared to price in the likelihood that Saudi Arabia’s fight with Russia over market share will worsen the dramatic spiral lower in prices, taking place against a backdrop of falling demand and plentiful supply.