US stocks suffer worst day since 2008 as recession fear spirals

New York (IANS) US stocks fell off a cliff on Monday with major indexes plunging close to bear market levels for the first time in more than 10 years as coronavirus fears and tanking oil prices brought back dark memories from the financial crash of 2008 and triggered a circuit breaker for the first time in 23 years that stopped trading for 15 minutes.

"There is a recession coming. We have seen it coming. We don't need to see the data to say this," JP Morgan Chief Investment Officer Bob Michele said after markets closed, awash in red.

The Dow Jones Industrial Average dropped nearly 8 percent Monday recording its worst drop since December 2008. Investors scrambled to find safe havens in government bonds, equities sold off across global markets and treasury yields sank to stunning lows. It was the first time the Dow lost more than 2,000 points in a session. All 11 sectors in the S&P 500 went south led by energy stocks.

"I haven't seen panic like this since 2008, nobody knows where this is going to end," a visibly rattled Wall Street banker told IANS.

The sell-off comes on top of growing fears of economic carnage from coronavirus or COVID-19 which has infected more than 110,000 people worldwide and killed about 4,000 even as countries are taking drastic measures to contain what the World Health Organisation (WHO) is calling an almost-pandemic.

Countries are unveiling drastic containment measures this week. Italy expanded a travel ban to the entire country, Israel ordering all visitors quarantined, Spain is closing all schools in and around its capital and in the US, school closures have begun in states with the maximum infections.

Falling oil prices roiled the markets even more as Russia decided not to cut back production despite lower demand. Saudi Arabia also plans to ramp up output.

Across office spaces in the US, workers are bracing for a perfect storm. On Monday, alternative work plans were already in full swing across major companies. Investment bankers in New York told IANS about strict rules around the most essential social mingling within extremely restricted work spaces. Workers in consulting roles are worried. Layoffs, furloughs and hiring freezes are dominating water cooler chatter.

"A global recession is certainly on the cards but it's not in anybody's playbook. It's hard to see how the intensity of concern is going to go away anytime soon," said Marvin Loh of State Street.

Donald Trump met with his economic advisers today discussing how to take the sting out of the coronavirus-led free fall. Donald Trump has staked his re-election on the performance of the markets.

Traders all around are saying they're hoping Trump's preoccupation with the markets will bring some swift policy response. The same evening, Trump promised he will unveil an economic relief package for workers, after speaking with Congress.

"The 11-year bull market is over," Peter Cecchini, chief market strategist at Cantor Fitzgerald, told Wall Street Journal.