Worst Day for Stock Market Since the Great Recession
by Arthur F. Beaugeard
Stock markets around the world have had their worst day since December 1, 2008, due to concerns about COVID-19 and a collapse in oil prices. The sudden fall, which occurred on Monday, March 9th, has been dubbed
Months ago, the New York Stock Exchange seemed unstoppable with an 11-year track record of growth but a recession seems imminent after the Dow Jones Industrial Average, an average based off of the stocks of 30 major American corporations, fell by 7.8% in just one day. The S&P and the NASDAQ, other important American stock indexes, fell by 7.6% and 7.3% respectively. In terms of total points, more than 2,000 have been lost in the NYSE, making it the worst day in the stock exchange’s history.
European markets have been hit similarly badly and markets on both continents have closed and reopened since they have surpassed the limit of losing 5% of their value in one day, a measure intended to slow decline. Indexes of London’s stock exchange show it tumbling 8% closer to zero. Major companies in the UK have lost a total of 125 billion pounds in value. Brazil, Japan, China, and Australia have lost 12%, 5%, 3%, and 7.3% respectively according to indexes of the stock markets in those nations. The Russian ruble has lost 8% of its value while banks in Frankfurt and Paris are struggling, proving it to be a truly global phenomenon.
Willie Delwiche, Baird Financial Services’ top market analyst, says “The market has had a crisis of confidence,” likely connected to major conventions and flights being cancelled, shops being empty, and a million other ways that the global economy has been hit by the Coronavirus. Premier Giuseppe Conte of Italy enforced a quarantine of Lombardy, a region home to 16 million people, which helped to spur the rapid economic collapse that has hit Italy the hardest in all of Europe. Other analysts have described what is going on as “utter carnage.” The price of gold has hit a 7-year-high of $7,500 per ounce, and it is being purchased en masse in these troubling times.
Another major hurdle that the market failed to overcome were slipping oil prices caused after Russia informed Saudi Arabia that they would not reduce their oil production due to reduced demand during the Coronavirus pandemic since Russia relies on the revenue which begot Saudi Arabia to ramp up production and sell their oil for peanuts. This has wreaked havoc on energy companies around the world and major oil producers such as Russia and the USA.
People usually spend money they save on gas on other things, which lessens the damage of stumbling and bumbling oil prices. However, since nobody wants to leave the house due to the Coronavirus, the damage caused by the Saudi’s excessive production will be especially brutal, according to energy equity analyst Stewart Glickman.
Trump has met with Secretary of the Treasury Steve Mnuchin and others, including top executives on wall street, to discuss actions that can be taken now for damage control, such as asking Congress to payroll tax relief.
Quincy Krosby, a strategist at Prudential Financial, echoes the fears of millions of analysts about this sombre day: “Is this just about the oil? Is this just about the virus? Or are we looking at a recession around the corner because of all of this?”
Associated Press. “Free-Fall in Oil, Virus Fears Slam Markets; Dow Drops 7.8%.” Journal, Las Vegas Review-Journal, 10 Mar. 2020, www.reviewjournal.com/business/free-fall-in-oil-virus-fears-slam-markets-dow-drops-7-8-1975510/.
“US Trading Halted as Shares Plunge around the World.” BBC News, BBC, 9 Mar. 2020, www.bbc.com/news/business-51796806.