The New York Stock Exchange has halted stock trading for 15 minutes after the S&P 500 fell 7% on Monday morning.
US stocks plummet on coronavirus fears: March 9, 2020
By CNN Business
Stocks plummeted on Monday as worries about the growing global coronavirus pandemic and an oil price race to the bottom weighed on global financial markets.
The selloff had begun in overnight futures trading, which was halted after futures contracts dropped nearly 5%.
The Dow opened 1,800 points, or 7%, lower.
The S&P 500 dropped 6.9%.
The Nasdaq Composite dropped 7.1%
All this comes after stocks managed to end the last turbulent week in the green. Despite three steep selloffs, the Dow also recorded its best point-gain on record last week.
The low-cost carrier withdrew its first-quarter and full-year financial guidance because it "did not reflect the impact of the coronavirus," it said in a regulatory filing Monday. Other airlines, like United, have recently done the same.
Shares are down more than 3% in early trading and 28% for the year.
US stock futures have already plummeted so much that they can't fall any further, amid coronavirus fears and a selloff in oil. Things could look similar for the major indexes in regular trade once the market opens at 9:30 am ET.
With futures halted at their near-5% declines, it's hard to tell just how much stocks will fall at the opening bell. But the ETFs tracking America's major share benchmarks, such as the SPDR S&P 500 ETF Trust, are down more than 7% pre-market, suggesting the indexes could hit circuit breakers when the market opens.
According to the New York Stock Exchange, a "cross-market trading halt" can be triggered in three stages:
- If the S&P 500 drops 7%, trading is stopped for 15 minutes.
- If it falls 13%, trading is halted for 15 minutes.
- If it drops 20%, trading is halted for the remainder of the day.
The dramatic crash in oil prices has sent energy stocks nosediving, battering a sector that had already been hit hard by shrinking demand due to the coronavirus outbreak and by cooling investor sentiment because of the climate crisis.
On Sunday, Saudi Aramco shares fell below their IPO price for the first time since they started trading in December. They've lost more than 15% in the past two days.
No help for airlines: Falling oil prices would typically provide some relief for airlines, which get a boost when fuel costs are low. But evaporating demand for flights as the novel coronavirus spreads means carriers aren't getting a lift.
Shares of Norwegian Air Shuttle dropped another 12% on Monday, while Air France KLM's (AFLYY) stock is off 3%, bringing its year-to-date decline to 44%.
British Airways owner IAG's (ICAGY) shares are 2.7% lower. The stock has dropped more than 32% this year.
The International Energy Agency said in a report Monday that in a worst case scenario — if the coronavirus continues to spread globally and China's need for oil remains subdued — global oil demand could fall by as much as 730,000 barrels a day in 2020.
The Paris-based agency, which monitors energy markets for the world's most advanced economies, says its base case is for a slump in demand of around 90,000 barrels a day, assuming that the situation in China improves in the second quarter.
LabCorp (LH) and Quest Diagnostics (DGX) are both racing to produce testing kits for the coronavirus. The two companies each said late last week that they are working to get COVID-19 testing kits ready for use by doctors as soon as possible -- based on emergency guidance issued by the U.S. Food and Drug Administration.
"In times of national health crises, quality laboratory testing is absolutely critical to mobilizing effective public health response," said Steve Rusckowski, chairman and CEO of Quest Diagnostics, in a statement.
“We have been intensely focused on making testing for COVID-19 available as soon as possible, working with the government and others to address this public health crisis,” Adam H. Schechter, president and CEO of LabCorp, said in a company statement.
Both stocks outperformed the market last week and they were each trading slightly higher Monday morning -- even as the Dow was set to plunge more than 1,000 points at the open.
With nearly two hours left before the stock exchange opens in New York, stock futures have plummeted so dramatically that they can't fall any further.
This doesn't bode well for the market open, at which the indexes could fall even more.
Dow futures are 1,255 points, or 4.9%, lower. Those for the S&P 500 are off by 4.9%, and Nasdaq futures are down 4.8%.
The market believes the Federal Reserve might slash interest rates all the way to zero in the face of the global coronavirus outbreak and the dramatic selloff in oil and global stocks.
Following last week's emergency half-point rate cut, market expectations are now for rates to go as low as zero during next week's regularly scheduled Fed meeting.
According to the CME's FedWatch Tool, the chances of rates at zero are 71%, which would be a whole percentage point lower than current rates. The last time -- and only -- time rates were at zero was during the financial crisis and its aftermath.