Wall Street suffers worst fall in three weeks amid growing concerns over oil

‘What you’re seeing is pulling back in the areas that have done well and taking profits while you can’

Wall Street has suffered its worst slump in three weeks, after oil prices fell for a second day, amid the coronavirus outbreak.

Oil prices dropped dramatically on Monday and continued the trajectory on Tuesday, causing stocks to fall for a second day in a row.

The stock market has varied wildly in the months since the coronavirus pandemic forced businesses to close all over the world.

The S&P fell in both February and March, as investors attempted to navigate the outbreak.

However, the market saw a rise earlier this month after a federal rescue package, that promised to put trillions of dollars into the financial markets, was agreed, reports the New York Times.

However, with many places in the US and around the world in lockdown, the demand for petroleum has decreased, which has caused oil prices to fall.

Steve Sosnick, chief strategist at Interactive Brokers, told the New York Times: “Every so often, reality bites. You could not ignore what was going on in the oil markets.”

Quincy Krosby, a market strategist at Prudential Financial told Reuters that it is too early to tell if the slump will be long term.

“What you’re seeing is pulling back in the areas that have done well, and taking profits while you can,” he said. “The question will be whether this is a consolidation after the market ran up so quickly, or is this the beginning of a more important pullback in the overall market.”

Some oil shares rose slightly on Tuesday, after Donald Trump announced on Twitter that he would help support the industry.

“We will never let the great US Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future,” he tweeted.

Earlier this month, analysts from Goldman Sachs warned that the coronavirus outbreak is “extremely negative for oil prices and is sending landlocked crude prices into negative territory.”

The fracking industry in the US has been widely forecast to suffer bankruptcies, as those businesses cannot sustain themselves when oil prices fall too low.

Goldman Sachs's global head of commodities research, Jeff Currie, said the pandemic would “permanently alter the energy industry and its geopolitics, restrict demand as economic activity normalises and shift the debate around climate change.”

According to a tracking project hosted by Johns Hopkins University, in the US there are upwards of 816,240 people who have tested positive for coronavirus. The death toll has reached at least 44,228.