Published: Sat, March 21, 2020
Markets | By Otis Pena

Dow plunges into bear market as selling accelerates

Dow plunges into bear market as selling accelerates

Even a climb in Treasury yields, which has been one of the loudest warning bells on Wall Street about the economic risks of the crisis, wasn't enough to turn stocks higher.

At 10:40 a.m. ET, the Dow Jones Industrial Average was down 1,424.47 points, or 5.51%, at 24,440.31, while the S&P 500 was down 160.27 points, or 5.39%, at 2,812.10. President Donald Trump's pledge to offer economic relief appeared to assuage investors.

Investors have resumed trading after the stock market suffered a massive dip that tripped a circuit breaker in Monday morning trading.

The broader S&P 500 - a proxy for United States retirement savings accounts and college savings plans - finished the session off 225.81 points or 7.6 percent.

Wall Street's main indexes started the day deep in the negative territory on Wednesday as the Trump administration failed to deliver the economic stimulus package to negate the impact of the coronavirus outbreak on the economic activity.

The three major indexes - the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite - closed in the red on Monday. USA stocks are now uncomfortably close to entering a bear market, defined as a drop of 20% from their peak.

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"When we talked about recession fears over the years since the financial crisis, we've always been comforted by relatively narrow credit spreads, " Ms. Shah said.

Into this maelstrom, Saudi Arabia has now unleashed an oil price war.

A plunge in crude prices has wiped out profits for energy companies, while record-low Treasury yields are squeezing the financial sector.

Asian stock markets took a breather from recent steep declines on Tuesday, with several. Markets plunged enough to trigger a rare automatic halt to trading early Monday.

Traders now expect U.S. Federal Reserve policymakers to cut interest rates for the second time this month when they meet next week. After initially taking an optimistic view on the virus - hoping that it would remain mostly in China and cause just a short-term disruption - investors are realizing they likely woefully underestimated it. Up until last week, it had never been below 1%. The price war pushed the price of crude down to roughly $30 per barrel. That has investors anxious about a worst-case scenario for corporate profits and the economy, where factories and supply chains are shut around the world due to quarantines and people stay huddled at home instead of working or spending. They can encourage people and companies to borrow, but they can't restart factories, restaurants or theme parks shut down because people are quarantined.

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