The Dow Jones Industrial Average dropped over 2,000 out the gate as OPEC is now in an all-out price war.
The world's largest oil cartel could not agree on production cuts in response to the coronavirus. Futures contracts at CME hit "limit down" over the weekend and halted trading for a short period. More on this story below.
First, here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:
| Index | Previous Close | Point Change | Percentage Change |
| Dow Jones | 25,864.78 | -256.50 | -0.98 |
| S&P 500 | 2,972.37 | -51.57 | -1.71 |
| Nasdaq | 8,575.62 | -162.98 | -1.87 |
Now here are what I think will be the most important market events and stocks on Monday morning.
The Top Stock Market Stories for Monday
- Oil prices crashed by more than 21% Monday after OPEC - the world's largest oil cartel - failed to reach an agreement on production cuts in the face of falling demand. WTI crude was off $9 to trade at roughly $32.50 per barrel. Brent crude traded at $35.45. This could be the worst day for crude oil trading since January 1991. After OPEC failed to reach a deal, Saudi Arabia announced plans to slash its prices for April and ramp up production to more than 10 million barrels per day. This is a brutal development for exploration and production companies that need at least $50 oil to survive.
Today, the new oil fears are overshadowing existing worries about the coronavirus. Over the weekend, Italy's death toll from coronavirus surpassed that of South Korea. France has now cracked down on large gatherings across the country. And the number of cases around the globe has passed 108,000. This morning, the United States government has taken a more proactive role in warning Americans about the pending disruptions to their daily lives. Over the weekend, the director of the National Institute of Allergy and Infectious Diseases said that Americans should avoid large crowds, long plane rides, and cruise ships.- The U.S. Treasury Bond crashed to an all-time low of 0.318% as investors claw for any remaining yield they can find on the planet. The historic rush on the bond markets has turned into a speculative rush. According to reports, the New York Federal Reserve announced plans to increase cash injections into overnight repo operations. The Fed announced its decision is "intended to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures that could adversely affect policy implementation."
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Stocks to Watch Today: CCL, RCL, COST, WLL, XOM
- Shares of Carnival Corp. (NYSE: CCL) are off more than 10% alongside some of its competitors. Cruise stocks plunged more than 10% after the U.S. government advised its citizens to avoid cruise ships. The U.S. State Department warned of "increased risk" to the coronavirus on cruise ships.
- Shares of Costco Wholesale Corp. (NASDAQ: COST) are off more than 5% this morning after the company announced plans to stop giving out free samples to customers as coronavirus spreads. Costco stock had been rising steadily over the last two weeks on reports that more Americans were stocking up their cupboards in case they experienced a prolonged period of isolation due to the virus.
- Finally, Exxon Mobile Corp. (NYSE: XOM) shares fell more than 15.6% this morning after Saudi Arabia announced plans to slash production prices in April. Crude oil prices are in a free fall and shareholders of various production companies are reeling this morning. Whiting Petroleum Corp. (NYSE: WLL) are off more than 42% this morning.
- Look for earnings reports from Stitch Fix Inc. (NYSE: SFIX), Vail Resorts Inc. (NYSE: MTN), 22nd Century Group (NYSE: XXII), Clarus Corp. (NASDAQ: CLAR), and Thor Industries Inc. (NYSE: THO).
How to Protect Your Money from Coronavirus Panic
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]The first thing to do during extreme market moves like today's is remain calm.
Make no mistake, the spread of the COVID-19 is very concerning.
We're not downplaying that.
But panicking in moments like this is the worst thing you can do.
Remember to maintain a disciplined investing approach.
And even though buying stocks right now may seem daunting, huge swings in the market are actually a great time to take advantage of volatility.
"Don't panic in the near term, and use the pullbacks to 'Accumulate' good wealth plays you're going to 'go long' with," Money Morning Executive Editor Bill Patalon said. "I call it the 'Go-Long/Buy-Good' strategy."
Patalon has been recommending this strategy to Money Morning readers since we were founded.
"I've fine-tuned it a bit by using the 'Accumulate' approach to maximize its power," he said. "You establish a foundational position in the stocks you like - and then add to those holdings on pullbacks or as you get more cash."
It's a sentiment he shares with Money Morning Chief Investment Strategist Keith Fitz-Gerald.
"Most people don't think this way, but remember how the game is played. You buy low and sell high," Keith says. "So believe it or not, what you want to do is buy in on big down days, knowing full well that volatility cuts both ways."
"That takes nerves of steel, because nobody knows when the markets are going to rebound. But we do know that history is very clear that they will. It's a function of growth, not headlines."
Keith always urges his readers to keep a list of "must have" stocks nearby. During times like this when the markets take big dips, you can swoop in and get excellent companies at better prices.
If you need stability right now and can't afford to take any losses on stocks, gold is a great choice.
You don't want to put all of your money in precious metals, but a small allocation between 2% and 5% is a good balance to volatile stocks.
At Money Morning, we like the SPDR Gold Trust ETF (NYSE: GLD). It's liquid, reliably tracks the price of gold, and has a low fee structure. You get the benefit of owning gold without the inconvenience.
Another profitable strategy is options trading. In the last week, we've shown readers two options strategies that resulted in gains of 450% and 50%. We've just released another today as well. Click here for more information.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.