Yun Li, Eustance Huang
Futures on the Dow Jones Industrial Average indicated an opening drop of more than 1,300 points. The S&P 500 futures indicated a 5% drop at Monday’s open. The S&P futures trading was briefly halted overnight. The sharp declines in the futures market signaled more turbulence ahead after a roller-coaster week that saw the S&P 500 swing up or down more than 2.5% for four days straight.
The massive sell-off could trigger key market circuit breakers during regular trading hours. If the S&P 500 drops 7%, trading will pause for 15 minutes. The SPDR S&P 500 Trust ETF (SPY), the exchanged-traded fund tracking the S&P 500, pointed to a nearly 6% decline at the open.
While Monday’s drop is poised to be significant, it still wouldn’t crack the 20 worst days in the S&P 500.
Investors continued to seek safer assets amid additional fears that the
Saudi Arabia on Saturday slashed official crude selling prices for April, in a sudden U-turn from previous attempts to support the oil market as the
“Crude has become a bigger problem for markets than the
International benchmark Brent crude futures plummeted 29.07% to $32.11 per barrel after dropping 30% earlier. U.S. West Texas Intermediate crude futures dropped 30.98% to $28.49 per barrel. The Energy Select Sector SPDR Fund (XLE), which tracks the energy sector, tumbled 15% in Monday’s premarket trading.
Bank stocks are getting smashed as lower yields put pressure on their margins, while an oil crash could cause energy companies to default on their obligations. JPMorgan plunged 9.3% in premarket trading.
Investors have already been on edge about the
“The idea that lower gasoline prices
Gold, another safe-haven asset, crossed $1,700 an ounce, hitting its highest level since Dec. 2012. Meanwhile, copper prices hit a more than three-year low of $2.46. Copper is seen as a barometer of broad economic demand given its applications in electrical equipment and manufacturing.
The Federal Reserve announced an emergency rate cut last week to combat the economic impact
Traders expect the central bank to slash rates by three-quarters of a percentage point at its upcoming March meeting. Chances for a full percentage point cut this month were at 29.2%, according to the CME FedWatch tracker.
The S&P 500 has fallen 8% this year after suffering its worst week since the financial crisis at the end of February. The benchmark is down more than 12% from its recent peak.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) fell 4.5% in
–CNBC’s Pippa Stevens contributed to this report.