US stocks plummet on coronavirus fears: March 9, 2020

It was an ugly day in the oil market -- the ugliest since 1991.

Oil prices suffered an historic collapse Monday after Saudi Arabia shocked the market by launching a price war against onetime ally Russia.

US oil prices crashed as much as 34% to a four-year low of $27.34 a barrel as traders brace for Saudi Arabia to flood the market with crude in a bid to recapture market share.

Crude settled with a staggering loss of nearly 26% to settle at $31.13 a barrel. Brent crude, the global benchmark, plunged 24% to close at $33.36 a barrel.

Both oil contracts fell to four-year lows.

Read more about the oil drop here.

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Bond giant Pimco is gearing up for a brief recession, according to a blog post from the firm's global economic adviser Joachim Fels.

A technical recession is defined as two consecutive quarters of negative growth. Japan likely is already in one, Fels said.

The spread of coronavirus has not yet peaked outside of China, but Fels said the bank assumes it will do so over the next several months. This underpins Pimco's thesis for a U-shaped trajectory for global growth. At the start of that pattern, however, there will be a steep drop in economic activity.

Pimco expects the Federal Reserve to step in and cut interest rates at least another half-percentage point to keep financial conditions accommodative.

"In addition, we expect most governments to put in place further fiscal easing to support demand and help the healing of the economy once the virus subsides," Fels said.

Monday's stock market plunge is bringing back painful memories of 2008 -- and leading to fears that the coronavirus outbreak will cause a global recession and bear market. But BlackRock (BLK), the Wall Street firm run by Larry Fink that just so happens to be the largest asset manager in the world, is urging investors to take a deep breath and relax.

"We do not think this is 2008," said analysts with the BlackRock Investment Institute, in a special report Monday.

"The virus shock’s impact will likely be large and sharp, but we believe investors should be level-headed, take a longterm perspective and stay invested. The economy is on more solid footing and, importantly, the financial system is much more robust than it was going into the crisis of 2008," the BlackRock analysts added.

The key to stopping the market selloff will be a "preemptive and coordinated policy response," said the influential BlackRock, which has $7.4 trillion assets under management including $2.2 trillion in popular iShares ETFs.

The Federal Reserve already cut interest rates by a half-point in an emergency move last week and traders are betting on an even bigger cut -- perhaps all the way back to 0% -- at the Fed's regularly scheduled meeting on March 18. But BlackRock also said more fiscal stimulus from lawmakers and the White House is needed.

NBCUniversal quietly sold its entire stake in Snapchat’s parent company, Snap, last year, according to an SEC filing dated January 30.

In March 2017, NBCUniversal acquired a $500 million stake in Snap as part of the social network’s initial public offering.

Snap stock fell more than 11% on Monday afternoon amid the broad market selloff. The Hollywood Reporter was the first to report the news.

In the years following its IPO, Snap has struggled to prove it can achieve a mainstream audience on par with rivals like Instagram and Facebook, which have both blatantly copied its most popular features, such as Stories that disappear after 24 hours. The 2017 redesign of its photo-sharing app was also met with backlash, and millions of users fled the platform. While the company has since bounced back and has steadily added users, its most recent quarterly report disappointed investors.

Recession fears are crushing small American stocks.

The Russell 2000 index of small-cap stocks plummeted 9% Monday and is on track to close in a bear market. The index is viewed as a barometer for confidence in the American economy.

A bear market would reflect a 20% decline from the record high set in January.

Other major US markets, including the S&P 500 and Dow, flirted with bear market territory on Monday but have not yet hit that threshold.

Bear markets are more common in small-cap stocks, which are very exposed to swings in the economy. The Russell 2000 has dropped into three previous bear markets since US stocks bottomed in March 2009, yet the broader markets did not follow suit.

The most recent example occurred in December 2018, when recession jitters similarly rocked Wall Street, driving the Russell 2000 into a bear market.

Other economically-sensitive stocks also fell sharply Monday, including large American banks. JPMorgan Chase tumbled 13%, while Bank of America plunged 16%.

Here we go...

The Dow has fallen 8.1%, tumbling more than 2,100 points. If it closes at that level, it would be the worst day for the Dow since October 26, 1987.

The S&P 500 fell by 7.7%, blowing through the first circuit-breaker level that it tripped minutes after trading opened for the day. The S&P 500 is on pace for its worst day since December 1, 2008, when stocks fell by just over 9%.

The Nasdaq was down "only" 6.7%.

The White House has invited Wall Street executives, including bank CEOs, to a meeting this week on coronavirus, according to an official familiar with the plans.

The meeting is likely to come later in the week, after Trump's expected meeting on Monday with advisers to determine next steps on containing the economic fallout related to the virus.

The official declined to provide a list of expected attendees.

Trump administration officials have already convened meetings with airline, cruise, pharmaceutical and diagnostic testing CEOs to discuss the outbreak.

The Washington Post first reported the expected meeting.

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US government bond yields dropped to a historic low of 0.32% Monday. Treasury yields have been trending lower for a while now, but the drop has accelerated over the past weeks.

The 10-year yield was last at 0.49%.

A flight to safer assets pushed Treasury prices up and yields down over the past weeks, as the fallout from the coronavirus outbreak caused panic in the markets. Fixed-income assets are also a traditional hedge for stock investments.

Monday's selloff was also a reflection of turmoil in the oil market, where prices dropped sharply.

On top of that, bond yields move down when the market expects lower interest rates in the future.

The Federal Reserve slashed interest rates by a half-point last week. It was its first emergency action since the financial crisis in 2008. Market expectations for another rate cut at the central bank's regularly-scheduled March 18 meeting are at 100%.

Expectations for a three-quarter point cut are just higher than for a full point cut. One way or another: rates are expected to go down.

If you thought you were having a bad day, think what it must be like to be the CEO of Apache (APA) today. The oil and gas exploration company's stock is down 50%, making it the worst performer in the S&P 500.

Not far behind is Diamondback Energy (FANG), which dropped 44.8%. Marathon Oil (MPC) fell 44.7%.

The destruction didn't end there:

Halliburton (HAL): -37%

Devon Energy (DVN): -36.5%

Hess (HES): -35.6%

Pioneer Natural Resources (PXD): -34.4%

Noble Energy (NBL): -33.9%

ConocoPhillips (COP): -25.9%

BP (BP): -19.5%

Total SA (TOTF): -16.6%

Chevron (CVX): -14.4%

ExxonMobi (XOM): -10.6%