Dow Dropped a Lot — But Panic Can Hurt Your Holdings
The stock market closed sharply lower Monday on continuing fears about novel coronavirus and a tanking of world oil markets after OPEC and Russia failed to agree on production.
The drop on Wall Street was so sharp it triggered the first automatic halt in trading in more than two decades.
Ken Kamen of Mercadien Asset Management in Mercer County said there is still a lot of fear on the floor.
"Panic spreads way quicker than any virus," Kamen said. "So I understand what's happening and knee-jerk reactions to what Wall Street is on about."
"I think the government is doing a very good job by saying that there are certain groups of people that are at high risk (for novel coronavirus)," Kamen said. "And if you're in that group, you need to be taking precautions. But I'm not sure it's the type of thing that should be grinding the economy to a halt."
There were deep oil price drops behind OPEC's and Russia's inability to agree on production levels, which also took their toll. The price of oil plunged nearly 25% when Saudi Arabia indicated it would ramp up production after Russia rejected production cutbacks in response to falling demand. Benchmark U.S. crude tumbled $10.15, or 24.6%, to settle at $31.13 a barrel.
But Kamen believes we will find a level.
"So while the market seems to find a new level here, recognize that, you know, everything doesn't just go in one direction," he said.
The Dow dropped 8% Monday, the worst drop since 2008.