On Monday, March 9, US markets plunged amid investor concerns over the economic impact of the coronavirus and the steep cut in oil prices as Saudi Arabia and Russia argue over prices and production.
The Dow Jones Industrial Average, one of the most important market indexes, fell 7.8% in what was the worst day seen on Wall Street since the 2008 financial crisis.
The losses come just days after Wall Street had the worst performing week since the financial crisis, heightening fears that the historic 11-year bull run in US markets might be coming to an end.
Trump mulling intervention
In response to the events, President Trump said that he would meet with Senate and House Republicans on Tuesday to “discuss a possible tax relief measure” to help offset the economic uncertainty.
Though details of any proposed measures have not been released, Trump mentioned that a payroll tax cut would be one of the things discussed in the meeting. Any tax relief would come on top of the $8.3 billion spending package that was signed last week to combat the virus.
A payroll tax cut would mean that workers would get less money taken out of their weekly or monthly paychecks for social security or possibly state and federal taxes.
Some White House officials have been pushing for a payroll tax cut since 2019 to help offset the prospect of a slowing economy.
Markets around the world reacted similarly, with Asian and European markets also seeing heavy losses.
Markets in Tokyo and Sydney dropped by around six percent while Hong Kong’s market dropped by four. Meanwhile, the London markets were down eight percent, also mirroring the worst days of 2008.
While fears of a global economic slowdown over the virus have contributed to investors’ fears — especially as cancellations, quarantines and travel bans are becoming more widespread — the fight over oil prices might be the leading catalyst in Monday’s market woes.
Oil prices also dropped on Monday by some 34% in the US after Saudi Arabia and Russia failed to agree to production terms during last week’s meeting between OPEC and non-member countries.
Stewart Glickman, an energy equity analyst at CFRA Research, an investment firm, characterized the failure to come to an agreement as a decision with serious economic implications.
“The craziness that you’re seeing in the oil prices today, and companies related to oil and gas, is a reflection of this being pretty unprecedented,” he said.
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