The weeks-long equity market rout paused only briefly last week, but stocks weren’t able to hold their ground.
On 4 March, U.S. stocks blipped up 1,173 points, the second-highest point gain ever.
Analysts tied the rise to soaring health care stock prices after the Democratic primary’s Super Tuesday, in which Joe Biden scored decisive victories against Bernie Sanders.
Sanders’ “Medicare for All” plan would, if enacted, effectively end private health insurance; Biden’s ascendance gave new hope that private health insurance companies have a future.
The next day, however, the market resumed its sell-off, ending the week almost where it began, closing up just 281 points from Monday and within 100 points of the previous Friday’s close.
Yesterday, stock prices around the world were in free-fall, with oil prices cratering and yields on U.S. 10-year treasury notes pushed to historic lows.
Main stock indexes in Britain and Germany fell about 7 percent, Australia’s closed down 7.3 percent, Japan’s was off 5.1 percent, and Shanghai dropped 3 percent.
Trading was halted briefly on U.S. exchanges after stock futures fell 5 percent before Monday’s open.
After falling more than 2,000 points, the Dow staged a weak rally and cut its losses by almost 800 points partway through the day but couldn’t sustain the move. The index finished the day with a loss of more than 2,000 points.
The NASDAQ was down 624 points and the S&P finished off 225 points.
The Dow started the day up nearly 1,000 points, only to sink into negative territory by noon as doubts persisted that governments potential fiscal stimulus plans to curb slower economic growth stemming from the coronavirus outbreak would do little to reverse the global down-trend.
But, then, the Dow rallied 1,100 points, halving its losses from Monday’s sell-off.
Oil Bust
Oil prices cratered on Monday after Russia was reluctant to sign on to a proposal made by OPEC and allies for new production cuts.
In response, the Saudis launched an oil price war, increasing production to drive prices even lower, forcing uncooperative producers to sell at steep losses or shut in their wells.
Benchmark West Texas Intermediate fell 22 percent to $32.2, its worst move since January 1991. Brent crude futures were down 21 percent, closing the day at $35.7 after touching a low of $31.0 in early morning trading.
As we go to press, oil prices spiked some 7 percent following reports that the Russian Energy Minister had not ruled out proposed OPEC measures, and considered holding a meeting with Russian oil companies on Wednesday to assess market conditions.
TREND FORECAST: In 2016, the last time oil prices fell so sharply, a gaggle of U.S. producers filed for bankruptcy. Deep in debt and with prices on a long-down trend, fears of bankruptcies again persist for shale producers who have borrowed billions… in the junk bond market.
