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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|
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).
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.