By Yasin Ebrahim
Investing.com – The Dow closed in bear-market territory Wednesday, led by a slump in energy and industrials, as coronavirus infections continue to rise worldwide, threatening to push the global economy into a recession.
The World Health Organization declared the coronavirus a global pandemic, sending the market into a selling frenzy.
The S&P 500 slumped 4.9%, though had entered a bear market intraday, but managed to close above those levels thanks to some late buying. The Nasdaq Composite lost 4.7%.
The Dow Jones Industrial Average fell 5.9%, or 1,465 points, putting it more than 20% below its recent highs, constituting a bear market.
Industrials fell 6%, paced by a slump in Boeing (NYSE:BA) after the aircraft maker reported weak orders and detailed plans to draw down the rest of a $13.8 billion loan facility. Boeing closed below $200 for the first time since July 2017.
Energy also fell 6% as oil prices slumped 4% amid ongoing fears of an oil price war between Saudi Arabia and Russia. In further signs of fears over slowing oil demand, OPEC and the Energy Information Administration cut their 2020 global oil demand forecasts.
“This energy bear market is unique in that it is both a demand and supply event,” said Bob Yawger at Mizuho. “The market is trending lower on coronavirus concerns and it is lower on Russia and Saudi Arabia adding supply for size to the market.”
In tech, meanwhile, chip stocks came under heavy selling pressure, with the Philadelphia Semiconductor Index falling 5.7%.
Despite the sea of red on Wall Street, some market observers have warned the correction has further room to run as investors worry the stimulus efforts from global institutions may not offset the impact of the coronavirus.
"Investor sentiment has adjusted lower, but risk premia are likely to remain elevated amidst concerns on the efficacy of potential policy responses," strategist Daniel Grosvenor said. "Meanwhile, downside risks are growing and equity investors appear to be waking up to the potential for corporate distress."