The Dow is wiping out gains made over the past year as traders sell, sell, sell on news of coronavirus contagion, oil prices collapsing and low long term interest rates. The “circuit breakers” were triggered when the S&P 500 fell 7% on opening and the prospects for a wild day of trading set in.
The world wide spread of coronavirus is negatively impacting travel, trade and public gatherings around the world. Conferences, religions gatherings from Mecca to Rome and public sporting events have all been canceled in an abundance of caution to contain the spread of COVID-19.
On top of the economic uncertainty resulting from the “black swan event” of a potential world wide pandemic there is now a collapse in the energy market. Over the weekend the Saudi and Russian oil producers could not agree on an approach to stabilizing oil prices by limiting production and the bottom fell out of the market. With prices of crude oil falling by half the prospect of financial turmoil for domestic U.S. energy companies is a certainty.
Trading stabilized when the markets reopened after a 15 minute halt but all eyes are on the Dow to see if uncertainty triggers a second sell off.