U.S. stocks plunged after trading floors opened on March 11, as the wild coronavirus-driven market swings of recent weeks were inflamed by an oil price war that was heating up.
The Dow Jones Industrial Average (DJI) fell by 953 points, or 3.81 percent, by 10:32 ET on March 11. In a display of the kind of extreme market volatility that has roiled markets in recent weeks, the blue-chip index saw its worst-ever single-day drop of over 2,000 points on Monday, before soaring on Tuesday to close up by 1,167 points.
The Wall Street “fear gauge,” or the VIX volatility index, spiked again on Wednesday, breaking through to 51.36, or up by 8.58 percent. A level of 31 is viewed as a red-line of sorts, above which the market is seen to be awash in extreme uncertainty and investor anxiety.
After easing on Tuesday, safe-haven bonds were once again under pressure, with the benchmark 10-year Treasury note yield plunging by 13.46 percent, in a sign that investors were seeking refuge from risk.
Oil futures—both Brent Crude and West Texas Intermediate—fell by nearly 4 percent Wednesday.
‘Anything Can Happen in a Crazy Market’
Oil producers have embarked on a global round of price cuts and production boosts as part of a fight for market share, ignited by top exporters Saudi Arabia and Russia, that has wiped more than 40 percent off the international oil market this year.
Following the collapse last week of coordinated output cuts by Saudi Arabia, Russia, and other major producers, Saudi Arabia said on Wednesday it would boost oil production capacity for the first time in more than a decade to 13 million barrels per day (bpd).
A day earlier, it announced a record increase in crude supply to 12.3 million bpd in April.
United Arab Emirates’ ADNOC joined in with a promise to increase production to more than 4 million barrels per day (mmbpd) in April, and accelerate a capacity expansion to 5 mmbpd.
These increases followed news on Tuesday that Russian oil companies might boost output by as much as 500,000 bpd, which sent the Russian ruble and stock markets plunging and delivered a fresh blow to crude prices that had already fallen by 25 percent on Monday.
“Anything can happen in a crazy market,” said a trader, who asked not to be named, from a Chinese refinery that has aggressively stepped up its purchase of cut-price Middle East crude, in comments to Reuters.
‘You’ll Be Hearing About It Soon’
On Tuesday, U.S. stocks rose sharply in volatile trading after President Donald Trump met with Senate Republicans on Capitol Hill and delivered a message on a much-anticipated coronavirus relief plan.
Emerging from the March 10 closed-door meeting with senators, Trump urged calm in the face of the outbreak and said there was “tremendous unity in the Republican party” in formulating a response to counter economic fallout from the outbreak.
Trump, who in the past two days has broached a payroll tax cut and relief for companies hit hard by coronavirus fears, offered no specific details on what had been discussed in the meeting, but added, “You’ll be hearing about it soon.”
U.S. Health Secretary Alex Azar told Fox News in an interview that the Trump administration on Wednesday plans to urge U.S. states and localities to take stronger steps to fight the coronavirus.
“You’re going to hear from CDC today and the White House that we’re going to be making recommendations to those local communities about aggressive steps that we think they should be taking,” he said.
The number of U.S. coronavirus cases has continued to rise steadily as almost three-quarters of U.S. states reported confirmed cases of COVID-19. More than 1,025 cases and 28 deaths have been reported, according to a count by Johns Hopkins University.
The rise in the number of coronavirus infections in the United States has concerned health officials and spurred calls for action to expand testing and avert an economic meltdown.
Reuters contributed to this report.