US stocks plummet on coronavirus fears: March 9, 2020

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%

What could be worse than being a bank stock or an oil stock on a day when both sectors are getting crushed? Being a bank with heavy ties to the energy sector.

Shares of Dallas-based Comerica (CMA) and Texas Capital Bancshares (TCBI) are down 19% and 23% respectively. San Antonio's Cullen/Frost Bankers (CFR) and Houston's Cadence Bancorp (CADE) plunged 22% and 28%.

And three other small regional banks -- Tulsa's BOK (BOKF), Lafayette, La.-based IBERIABANK (IBKC) and Hancock Whitney (HWC) of Gulfport, Miss. -- all plummeted more than 20% as well. All seven of these banks have between 4% and 18% of their loans tied up in the energy sector.

The rapidly falling price of oil is likely to put more pressure on energy companies in the United States, which will hurt the banks with the most credit exposure to the oil industry, according to CFRA Research analyst Pauline Bell.

Bell has a "sell" rating on Comerica, which has 4% of its loan book tied to oil companies, and Cullen/Frost, where 11% of its net loans are to energy firms.

There's no bright spot on the horizon for stocks today. The S&P 500 -- the broadest measure of the stock market -- is on track for its worst day in more than three years.

In the early afternoon, the S&P is down 6%. While energy stocks are faring the worst, only ten of the index's components are in the green.

The Dow is down 6.4%, or 1,665 points, set for its biggest drop since December 2008. The Nasdaq Composite is 5.3% lower.

Even though most market participants are preaching calm and urging retail investors not to panic, Wall Street's computer screens sure are looking red today.

Worries about the economic impact of the coronavirus pandemic have been weighing on markets for weeks. But a steep drop in oil prices overnight made things worse.

Why Wall Street underestimated coronavirus concerns:

Bank stocks are tumbling Monday as expectations of further interest rate cuts weigh on their core lending business.

JPMorgan (JPM) -- America's biggest bank by assets -- dropped more than 11%. Shares of Bank of America Merrill Lynch (BAC) dropped more than 13% and Citi (C) shares are down more than 12%. All three banks have both investment banking and large-scale retail operations, which make them subject to interest rate changes on all fronts.

Morgan Stanley (MS) and Goldman Sachs (GS) both dropped nearly 9%.

The Federal Reserve slashed interest rates by a half percentage point last week in an effort to stave off the economic fallout from the global coronavirus outbreak.

But the market expects this won't be the last rate cut this month.

The CME's FedWatch Tool shows a 64% chance of another three-quarter point cut at next week's Fed meeting. The odds have been fluctuating throughout the day, but the message is clear: The market expects lower rates.

Stocks plummeted across the board as investors worry about the economic repercussions from the global coronavirus outbreak and tumbling oil prices.

Wall Street veteran and former Goldman Sachs (GS) CEO Lloyd Blankfein weighed in about Monday's dramatic selloff, telling people not to panic and predicting a swift recovery when the coronavirus outbreak ends.

Market participants are trying to make sense of Monday's steep stock selloff that was so drastic it triggered a brief halt to trading on the New York Stock Exchange.

Investors are grappling with worries about the economic fallout from the coronavirus pandemic and an oil price war that has tanked prices.

WATCH:

There aren't many smiles on Wall Street today -- except for investors who own Walmart (WMT) shares. The stock was up 2% in late-morning trading Monday, making it easily the best performing Dow stock.

Drug store giant Walgreens (WBA) and Verizon (VZ), which is viewed by many safe haven investors as a bond proxy because of its big dividend yield were the only other two Dow 30 stocks even close to trading higher. Walmart was also just one of 14 S&P 500 stocks in green.

Traders seem to be betting that nervous consumers will be flocking to their nearest Walmart to stock up on supplies in case they have to hunker down at home due to growing coronavirus fears.

Discount retailers Dollar Tree (DLTR) and Dollar General (DG) and Walmart competitor Target (TGT) were also trading higher. So was wipes maker Clorox (CLX), Kleenex tissues and Scotts toilet paper manufacturer Kimberly-Clark (KMB) as well as Hormel (HRL), the producer of SPAM canned meat.

Wall Street's bet on a bunker mentality shopping mode didn't help most other retailers and makers of household goods though. Amazon (AMZN) was lower. The S&P Retail ETF (XRT) was down 3.5% while the Consumer Staples ETF (XLP) fell 2%.

A 2,000-point plunge. A 15-minute trading halt. And a near-bear market in stocks. No doubt it's a scary time on Wall Street.

Yet the New York Stock Exchange is stressing that none of this means that anything is broken in the financial system. Investors are simply reacting to the worsening coronavirus outbreak, along with an historic collapse in oil prices.

US markets bounced off their lows following the 15-minute trading halt, which was the first time NYSE's circuit breakers were triggered in their current form. The trading halts are designed to prevent panic selling. The Dow was recently down 1,500 points, or 6%.

"Markets come back over the long term," Cunningham said. "I don't mean to minimize when markets move down. We want to protect investors and make sure markets are acting appropriately."

The recent plunge on Wall Street contrasts with previous episodes where something did appear to be amiss in markets, such as the May 2010 flash crash.

"It doesn't mean there is anything wrong with the market," Cunningham said of Monday's drop.

Watch the interview here:

With the Dow down close to 6%, Walmart is the only stock trading in positive territory. The rest of the "best performers" are all in the red.