Updated at 4:39 p.m. ET
Stock indexes tumbled so fast Monday that trading on the New York Stock Exchange was halted temporarily for the first time since October 1997. The Dow Jones Industrial Average lost 2,013 points as fears grew over the economic impact of the coronavirus epidemic. The blue chip index fell nearly 7.8%, and the S&P 500 dropped 7.6%.
It was the worst day for the market since 2008, during the financial crisis.
It was the first marketwide trading halt since the crash of Oct. 27, 1997, when the Dow fell 554 points, or 7.2%.
With Monday's dive, the Dow and the S&P 500 are now down about 19% from their peaks in February. If the S&P 500 drops 20% from the recent peak, the stock market will be considered in bear market territory.
The financial market chaos comes amid increasing worries that the coronavirus epidemic will plunge the global economy into recession. Stocks also fell sharply in Asia and Europe.
The price of oil also fell — down about 25% Monday following the unexpected Saudi move.
As investors fled stocks and sought relative safety in government bonds, the yield on the benchmark 10-year Treasury note fell below 0.4% overnight before climbing above 0.5% during the day.
Over the weekend, Saudi Arabia announced a stunning discount in oil prices — of $6 to $8 per barrel — and a boost in production.
The move was a dramatic reversal from a few days earlier. Late last week, talks between OPEC and Russia collapsed after weeks of negotiations. The kingdom had tried but failed to get Russia to agree with OPEC to cut production to keep prices from falling in reaction to economic worries about the coronavirus.
The oil price war comes amid increasing fears that the coronavirus will hit the global economy hard as factories shut down, travel plans are canceled and spending grinds to a halt. In Italy's industrial region, 16 million people are under quarantine as the country fights to control the coronavirus outbreak there.
Worldwide, there are more than 110,000 COVID-19 cases, including more than 7,000 each in South Korea, Italy and Iran, according to a dashboard created by Johns Hopkins University's Whiting School of Engineering.
NOEL KING, HOST:
Fears of the coronavirus caused stocks to plunge when markets opened at 9:30 this morning. Trading was temporarily halted after the S&P dropped 7% in just minutes. Trading has started again. NPR's chief economics correspondent Scott Horsley is with me in studio. Hey, Scott.
SCOTT HORSLEY, BYLINE: Good to be with you, Noel.
KING: So what happened this morning? There's two things - stocks and oil prices both plummeting.
HORSLEY: That's right. Obviously, we have the background concerns about the coronavirus and the damage that that threatens to do to the U.S. and global economies. That's sort of been a cause for a lot of volatility in the last couple of weeks. And then today's move was really triggered by a Saudi surprise overnight. Saudi Arabia decided to slash the price of oil and flood the oil market.
And that really took world markets by surprise because until just yesterday, the Saudis and the Russians had been trying to negotiate a cut in oil production in order to put a floor under oil prices, to prop up oil prices. They couldn't cut a deal. And so Saudis have just said, OK, we're going to flood the market and try to steal market share from Russia. That's good for gasoline customers, but of course, this comes at a time when nobody wants to go anywhere. It's certainly bad for energy companies. And it comes at a time when already we were seeing declining demand for oil because the world economy is sort of jittery right now.
International forecasters have been saying we could see the first absolute decline in worldwide oil demand this year since the Great Recession in 2009. So all of this has just made an already jittery market even more so.
KING: Just very quickly, what are you going to be watching for for the rest of the day?
HORSLEY: Well, trading has restarted now, and the stocks have gained back a little but - of what they've lost. But after a roller coaster ride on Wall Street last week, it looks like we're in for another fasten-your-seat-belt situation.
KING: NPR's Scott Horsley. Thank you, Scott.
HORSLEY: Good to be with you. Transcript provided by NPR, Copyright NPR.