The US Dow Jones Industrial Average index transitioned into a bear trend on 11 March amidst ongoing concerns regarding the coronavirus outbreak that triggered massive stock sale-offs. The transition took place as the index lost over 20% since the last peak registered on 21 February, which is widely considered an informal margin marking the start of the bear market.
Dow Jones closed at 23,553 points on11 March losing around 5.9% from the previous day and 20.3% to the 29,551-point high record set a month ago. This is the third time US markets have sustained such losses over a short period of time since they turned bullish in the follow-up to the 2008 financial crisis.
Similar corrections were also witnessed between April and October 2011 and between September and December 2018, but a US index never lost over 20% so fast. The drop that normally takes at least two months was achieved by Dow Jones in 19 trading sessions or little less than a month. It's also unclear if the fall is anywhere close to being over.
Another troubling sign is that other major American indices, like the S&P 500 showing the performance of the top 500 US companies, and the Nasdaq Stock Exchange's index also actively plummeted towards the 20% realm. As of March 11, the S&P 500 had lost 19.04% to its previous maximum set on 19 February, while Nasdaq dropped by 12.65% from a high achieved on the same day.
The ongoing drastic stock market losses are taking place as global economies suffer from a double whammy of the coronavirus outbreak and staggering drop in oil prices. The latest 5% fall of US indices took place against the backdrop of World Health Organisation chief Tedros Adhanom Ghebreyesus’s statement officially declaring the COVID-19 outbreak a "pandemic" after almost 125,000 contracted the disease and 4,607 died from it.
Crude prices, in turn, took a steep nosedive on 9 March after members of the OPEC+ agreement failed to reach a consensus on prolonging production cuts to keep up the price of black gold. Additionally, one of OPEC’s main members, Saudi Arabia announced it will boost production and give a significant discount on the oil it sells, further driving crude prices down.