Stocks - Wall Street off Lows, but Bears in Control Amid Oil-Led Selloff Storm
Investing.com
Published Mar 09, 2020 12:42PM ET
Updated Mar 09, 2020 12:57PM ET
By Yasin Ebrahim
Investing.com – The Dow clawed back some gains, but the sea of red continued to cloud over stocks amid a historic plunge in oil prices after Saudi Arabia launched a price war against Russia and spread of the new coronavirus continued to dent investor sentiment.
The Dow Jones Industrial Average fell 1,373 or 5.29%, but was down more than 2,000 points at lows, the S&P 500 fell 5.15%, after trading was halted just after the open following a 7% slump. The Nasdaq Composite tumbled 4.51%.
Energy fell to its lowest intraday level since 2004, as oil prices plunged 30%, before slightly paring losses, after Saudi Arabia sent shockwaves throughout the market by launching a price war against fellow oil superpower Russia.
Saudi Arabia slashed its April official selling prices by $6 to $8 to grab market share and pile pressure on Russia. The move came after the OPEC and Russia failed to agree a deal to extend oil production cuts.
Occidental Petroleum (NYSE:OXY) fell 35%, Apache (NYSE:APA) fell 45% and Diamondback Energy (FANG) plunged 44% after cutting its capital expenditure plans for the year.
Some have suggested, the selling in oil may be far from over as Saudi Arabia and Russia have their eyes on a market share grab.
"During the late-2014 to mid-2016 meltdown, stocks imploded by 45-50%--but this was when the illusion of shale vitality was alive and well," said Bill Herbert of Simmons Energy. "Given the stigmatization of the industry, the redefinition of balance sheets as a result of biblical asset impairments and writedowns, and the industry's penal cost of capital, downside valuation support, today, is an unknown."
The bloodbath on Wall Street prompted a flight to safety as investors piled into safe-haven Treasuries, pressuring yields to record lows.
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