Trading on Wall Street was frozen within minutes of the market opening as the system to buy and sell shares failed to keep pace with events. The Dow Jones plunged by more than 2,000 points for the first time ever, a decline of 7.8%.
Global stock markets posted their steepest falls since the 2008 financial crisis on Monday after a crash in the oil price amplified concerns about the escalating economic cost of the coronavirus outbreak.
The market has tumbled 18% in the past week and a half, with companies listed on the S&P 500 losing just over $5 trillion of their value. The latest slump put the Dow close to “bear market” territory, or when stocks sink at least 20% from their previous peak.
The US Federal Reserve issued its first emergency rate cut since the 2008 crash last week, although economists said further cuts, possibly close to zero from the current level of 1-1.25% could be required to shore up confidence as fears mount for global growth.
Neil Shearing, a group chief economist at the consultancy Capital Economics, said: “The most likely worst-case scenario today is a sharp but probably short recession rather than an outright depression … [but] as the virus spreads, there’s a good chance that that ‘worst case’ scenario quickly becomes the most likely scenario.”
Image Credit: Elbie Ancona / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)