The
Dow Jones Industrial Average tumbled 7.8% Monday, its steepest drop
since the financial crisis of 2008, as mounting alarm over the
coronavirus combined with a crash in oil prices to send a shudder
through world markets.

The staggering losses immediately raised
fears that a recession might be on the way in the U.S. and that the
record-breaking 11-year bull market on Wall Street may be coming to an
abrupt end in a way no one even imagined just a few months ago.

The
drop was so sharp that it triggered the first automatic halt in trading
in more than two decades. European stock indexes likewise registered
their heaviest losses since the darkest days of the 2008 meltdown and
are now in a bear market.

Together, the sell-offs reflected
growing fear over the potential global economic damage from the
coronavirus, which has infected more than 110,000 people worldwide and
killed about 4,000 while triggering factory shutdowns, travel bans,
closings of schools and stores, and cancellations of conventions and
celebrations big and small.

“The market has had a crisis of confidence,” said Willie Delwiche, investment strategist at Baird.

The
market slide came as Italy, the hardest-hit place in Europe, began
enforcing a lockdown against 16 million people in the north, or
one-quarter of the country’s population, and then announced that travel
restrictions would be imposed nationwide. Premier Giuseppe Conte said
all people will have to demonstrate a valid reason to travel beyond
where they live.

The turmoil — marked by masked police officers
and soldiers checking travelers’ documents amid restrictions that
affected such daily activities as enjoying a espresso at a cafe or
running to the grocery store — is expected to push Italy into recession
and weigh on the European economy.

Elsewhere around the world,
Ireland went so far as to cancel St. Patrick’s Day parades, and Israel
ordered all visitors quarantined just weeks before Passover and Easter,
one of the busiest travel periods of the year.

In the U.S., a
cruise ship with a cluster of coronavirus cases that forced it to idle
off the California coast for days arrived at the port of Oakland as
officials prepared to start bringing passengers to military bases for
quarantine or get them back to their home countries. The Grand Princess
had more than 3,500 people aboard — 21 of them infected with the virus.

The
escalating health crisis combined with another, intertwined development
— plummeting oil prices — to drag down the market: The price of oil sank nearly 25%
after Russia refused to roll back production in response to
virus-depressed demand and Saudi Arabia signaled it will ramp up its own
output.

While low oil prices can translate into cheaper
gasoline, they wreak havoc on energy companies and countries that count
on petroleum revenue, including the No. 1 producer, the United States.

“The
fear today is: Are the bears correct in talking about a recession
around the corner from this?” said Quincy Krosby, chief market
strategist at Prudential Financial. “Is this just about now? Is this
just about the oil? Is this just about the virus? Or are we looking at a
recession around the corner because all of this?”

President
Donald Trump was scheduled to meet with Treasury Secretary Steven
Mnuchin, economic adviser Larry Kudlow and other aides when he returned
to the White House about a range of economic actions he could take. He
also invited Wall Street executives to the White House later in the week
to discuss the economic fallout of the epidemic.

On Wall Street,
the S&P 500 plunged 7.4% in the first few minutes after the opening
bell before trading was halted by the market’s circuit breakers, first
adopted after the crash of October 1987 and modified over the years to
give investors a chance to catch their breath. The market-wide circuit
breakers have been triggered only once before, in 1997.

After the
15-minute pause, the S&P trimmed its losses, but still closed 7.6%
lower on the day. The Dow fell 2,013 points, or 7.8%, to 23,851.02. The
Nasdaq gave up 7.3%.

The S&P 500 has fallen 18.9% from the
record high it set on Feb. 19 and has lost $5.3 trillion in value during
that time. U.S. stocks are now uncomfortably close to entering a bear
market, defined as a drop of 20% from its peak.

Italy’s stock index plunged 11.2%. Britain, France and Germany were down between 7.7% and 8.4%

The
interest rate, or yield, on U.S. Treasury bonds sank to all-time lows
as investors looking for a safe place kept on sinking money into them,
even as the return on their investment sank closer and closer to zero.
The yield on the 10-year Treasury note plunged to 0.59%. Up until last
week, it had never been below 1%.

The carnage in the energy
sector was particularly bad. With benchmark U.S. crude dropping to under
$32 a barrel, Marathon Oil, Apache Corp. and Diamondback Energy each
sank more than 40%. Exxon Mobil had its worst day since 2008, while
Chevron had its second-biggest drop ever.

“We knew it was going to
be a hot day,” said John Spensieri, head of U.S. equity trading at
Stifel. He said that the mood was “organized chaos” in the morning but
that the trading halt achieved what it was supposed to by stopping the
slide.

Despite the scary-looking red numbers flashing on CNBC and
other financial news channels, some financial consultants advised
ordinary investors to stick to their long-term plan and not panic.

Scott
Heydt, a financial consultant at Heydt Air, said he expects the market
will go back to normal, even though it could take a year or so. “It’s
definitely not a comfortable time,” he said. “But people need to stop
looking at their portfolios on their smartphones every two seconds if
they don’t have a stomach for it.”

For most people, the
coronavirus causes only mild or moderate symptoms, such as fever and
cough. For some, especially older adults and people with existing health
problems, it can cause more severe illness, including pneumonia. The
vast majority of people recover from the virus, as has already happened
with about three-quarters of those infected in China.

In the U.S.,
the number of people infected climbed to around 600, with at least 26
deaths — at least 19 of them associated with a single Seattle-area
nursing home.

While the crisis is easing in China, where the virus
was first detected, fast-growing clusters have turned up in South
Korea, Iran and Italy, and the caseload is growing in the United States.

After
initially taking an optimistic view on the virus, hoping that it would
remain mostly in China and cause just a short-term disruption, investors
are realizing they probably underestimated the crisis badly.

Traders
are increasing betting that the Federal Reserve will cut interest rates
back to zero to do what it can to help the virus-weakened economy,
perhaps as soon as next week. But doubts are rising about how effective
lower rates can be this time. They can encourage people and companies to
borrow, but they can’t restart factories, restaurants or theme parks
shut down because people are quarantined.

The Fed has already cut its benchmark short-term rate to a range of 1% to 1.25%, leaving little room to cut more.

“Central
banks are a bit player in the current crisis,’’ Ethan Harris, global
economist at Bank of America, wrote in a research report.

The clamor is growing louder for help from authorities besides central banks.

“Today’s
market action may bang some heads together and actually start thinking
about the constructive measures the government can take,’’ said Jacob
Kirkegaard, senior fellow at the Peterson Institution for International
Economics.

Among other things, Kirkegaard said, the government
should make sure all Americans get paid sick leave and health care
coverage for virus-related ills.

AP Business Writer Damian J. Troise and AP Economics Writer Paul Wiseman contributed. The Associated Press receives support for health and science coverage from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.