NEW yORK CITY, March 9, 2020 (UPI) — Trading on Wall Street was automatically brought to a halt for 15 minutes early Monday after the S&P 500 plummeted 7 percent and the Dow Jones Industrial Average lost nearly 2,000 points.
A built-in safety mechanism designed to avert a free fall stopped trading on the New York Stock Exchange just after 9:30 a.m. EDT, spurred by falling oil prices and further concern about the coronavirus outbreak. Saudi Arabia said earlier Monday it would increase oil production in response to Russia declining to join OPEC in curtailing production.
The last time the safety mechanism — a circuit breaker that cuts power to critical market infrastructure — stopped trading was December 2008 during the financial crisis. The breaker was installed following the “Black Monday” crash of Oct. 19, 1987, which saw the Dow lose more than 22 percent of its value.
The breaker trips when certain activity on the Dow or S&P 500 is detected. Known as a “side car,” the safeguard has been activated only on rare occasions in the last 30 years.
The markets have been volatile in recent weeks over fears of COVID-19 becoming a global pandemic.
The Dow was down 1,455 points by 11:30 a.m. Monday, while the S&P 500 had lost about 160 points, or 5 percent. The Nasdaq was also down about 5 percent.
Overseas, stock markets closed sharply down in Asia and were down late in Europe.
“There’s always winners and losers in any market, but right now the idea that lower gasoline prices are going to put more cash in workers’ pockets and give consumer spending and the economy a boost doesn’t seem to cushion the blow for stock market investors,” Chris Rupkey, MUFG’s chief financial economist, said. “They want out. Big time. The sky is falling.”
The coronavirus already had markets rattled before the Saudi announcement. Some businesses have told workers to stay home and telecommute while universities like Stanford and Columbia are postponing classes.
“If you ever wondered what would happen if someone lobbed a hand grenade into a bloodbath, now you know,” Tom Holland of investor advisory firm Gavekal, said. “It’s not pretty.
“Investors logging onto their screens on Monday have been greeted by a sea of red, the like of which has not been seen for 10 years.”