The Dow Jones Industrial Average tumbled 7.8% Monday, its steepest drop since the financial crisis of 2008, as mounting fears over the coronavirus combined with a crash in oil prices to send a shudder through world markets.
The drop on Wall Street was so sharp that it triggered the first automatic halt in trading in more than two decades. European markets likewise registered their heaviest losses since the darkest days of the 2008 meltdown and are now in a bear market.
Together, the damage reflecting mounting alarm over the coronavirus epidemic that has closed factories, schools and stores and led to travel bans and unprecedented quarantines.
“The market has had a crisis of confidence,” said Willie Delwiche, investment strategist at Baird.
U.S. stocks are now down 19% from the peak they reached last month. Bond yields fell to all-time lows as investors sought safer places to put their money, even if the returns on their investment slid ever close to zero.
On Wall Street, the S&P 500 plunged 7.4% in the first few minutes after the opening bell before trading was halted by the market’s circuit breakers, first adopted after the crash of October 1987 and modified over the years to give investors a chance to catch their breath. The market-wide circuit breakers have been triggered only once before, in 1997.
After the 15-minute pause, the S&P trimmed its losses, but still closed 7.6% lower on the day. The Dow fell 2,013 points, or 7.8%, to 23,851.02. The Nasdaq gave up 7.3%.
The slide pushed U.S. stocks ever closer to a bear market, defined as a drop of 20% from its peak, while a gauge of fear on Wall Street reached its highest level since the 2008 global financial crisis.