Business
Stocks Slide Over Oil War and Coronavirus Fears
Fears over the coronavirus and an oil price war sank the Dow Jones Industrial down 2013.76 points, a 7.79% drop by the end of Monday’s rollercoaster day. The S&P 500 had its worst day since 2008.
Five minutes after the trading day started Monday, the S&P 500 fell 7% triggering an automatic 15-minute halt to trading known as a “circuit breaker,” marking the first time trading was automatically stopped since 1997.
“[The circuit breakers] give markets an opportunity to catch their breath, essentially, so it’s not just selling begets selling and down we’d go,” said Marc Horner, president and founder of Fairhaven Wealth Management.
Oil prices also plummeted about 24% to $34 a barrel, which is the biggest one-day crash since the Gulf War in 1991. The price crash happened after the Saudi Arabian oil company, Aramco, slashed prices and promised to increase output after the Saudi-led Organization of the Petroleum Exporting Countries (OPEC) failed to reach a deal with Russia over oil-production cuts. A flooded oil market will hurt U.S. shale producers that exports oil.
Horner says both coronavirus fears and the battle over oil is causing market volatility.
“OPEC is waging a price war on Russia in saying that they’re going to produce a whole bunch of oil to drive down oil prices,” he said. “Coronavirus, in particular, boils down to people don’t know what that might lead to.”
Horner said he hasn’t been flooded by client calls amid the selloff. “Thankfully, we’ve got relatively few client calls,” he said. “And actually all of the clients that are making moves, clients are sticking to their long-term investment plan.
“There’ve been a couple of clients that have decided to move to cash, but they are outnumbered by clients that have been buying into the decline and adding to their stock side of their portfolio.”
