Stock market is tanking, and this is why

The stock market has fallen so hard and so fast that trading on the New York Stock Exchange has been automatically stopped for 15 minutes in a second “circuit breaker” moment this week.

The fear is that the coronavirus is spreading, and will lead to more widespread slowdowns in the economy as people are pulled out of economic activity as they’re stuck at home, discouraged from going to restaurants, afraid to visit malls, etc.

Add to that a drop in the price of oil, and stocks have been in a free fall.

why a drop in oil price cause the stock market to tank

As the world economy has slowed from COVID-19, demand for oil has decreased. When demand decreases, price drops. In order to offset this, OPEC (Organization of the Petroleum Exporting Countries) got together and decided to slow the production of oil. This would cause supply to decrease, and would help to stabilize prices. Russia, also an oil exporter, but not an OPEC country, refused to do it.
In order to assert itself, Saudi Arabia said they would then INCREASE supply and decrease prices further–probably in order to run Russia out of the oil business.
Doing this means that US oil prices dropped.
This is great for consumers at the pumps, but US oil producers can’t stay in business with prices this low, which could drive US oil companies out of business and lead to forfeitures on loans and dependence on foreign oil.
According to the WHO, China and South Korea have used effective techniques to contain the spread of COVID-19. How does China’s reaction to the coronavirus differ from the U.S.? Check out the debate here.

The President spoke to the nation as an attempt to bring calm to the country and the stock market. Instead, stocks plummeted. Geek out on the full text of his address to the nation here.

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