When fear hits the stock market

Picture Credit: Image credit: Associated Press (https://apnews.com/d69d338f530492125c92424b8ae3290d/gallery/992feb7581e347068916e8edb67e65ba)

Picture Credit: Image credit: Associated Press (https://apnews.com/d69d338f530492125c92424b8ae3290d/gallery/992feb7581e347068916e8edb67e65ba)

Panic has extended to the stock market after fears concerning COVID-19 and a major oil price war.

On March 9, the stock market took quite a hit. Both the Nasdaq and S&P 500 went down by almost 7% and the Dow lost over 2,000 points, according to Yahoo Finance.

The market was prevented from free falling thanks to circuit breakers that halted trading for a few minutes after a drop of 7% from the previous day’s closing price.

NPR stated, “Monday’s halt did its job, with the major indexes coming off their lows once trading resumed. However, the indexes fell again later in the day, with the Dow Jones Industrial Average down more than 2,000 points, or nearly 8%.”

Two major factors contributed to this stock market activity; one being the coronavirus, the other being a price war between Russia and Saudi Arabia. 

The latter started after Russia refused to be part of the OPEC oil cartel, which, according to the Associated Press, “proposed production cuts aimed at supporting prices.”

Saudi Arabia retaliated the move by slashing prices on their oil and increasing production, a move which lowered the price of oil. Drivers as far as the United States were able to pay less for their gas due to this.

Associated Press reported, “When crude (oil) fell to $36 in 2016, prices at the pump averaged $2.15. Lower pump prices meant people had more to spend on other goods.”

Perhaps the more local cause to the stock market’s behavior was coronavirus, which spreaded through the U.S. and caused communities to plan for the worst.

The coronavirus, or COVID-19, was more widespread and negatively impacted certain industries, such as travel and tourism.

KSL reported that three Utahns plus multiple Utah Jazz players tested positive for COV-19, and that some states, such as California, have received more and more positives for the virus.

President Donald Trump made a speech concerning coronavirus on March 11, but the stock market still plunged and entered a bear market.

According to The Balance, a bear market is when asset prices decrease over time and tend to come with recessions, which can cause “layoffs and high unemployment rates.”

Utah’s economy suffered not only because of the stock market, but also due to the fear of having many coronavirus cases.

According to the Salt Lake Tribune, not only have restaurants been ordered to shut down, some bigger shopping centers have too, such as City Creek.

Mark Alson, president of The Bayou, explained, “We’re playing it day by day.We’re doing to-go orders and curbside to-go orders. But we have no idea how long that’s going to remain sustainable.”