The stock market was in full-blown panic mode on Monday, with steep declines in all the major indexes triggering a brief halt to trading after circuit breaker rules were activated. The Dow Jones Industrial Average (^DJI 0.40%) was down 5.5% at 10:40 a.m. EDT.
Boeing (BA 0.25%) stock was having a particularly rough day, with shares hit by the broad market sell-off as well as reports that a wiring fix may be necessary for the grounded 737 Max. Oil majors Chevron (CVX 0.37%) and ExxonMobil (XOM -2.78%) also tumbled following some weekend turmoil in the oil markets.
Image source: Getty Images.
Boeing hits more 737 Max snags
Shares of plane manufacturer and defense company Boeing were down 8.4% Monday morning. While the steep stock market sell-off was behind some of the losses, there was some bad news for the company over the weekend.
The Wall Street Journal reported on Sunday that Boeing's proposal to avoid shifting wires in the grounded 737 Max had not won support from U.S. regulators. In January, The New York Times reported that Boeing had found a wiring issue with the 737 Max. Two bundles of wires were too close together, which created a risk of a short circuit that could down the plane.
The Federal Aviation Administration reportedly does not agree with the company's assessment that the current wiring configuration meets safety standards. The agency is now likely to order Boeing to relocate the wires, which could further delay the return of the 737 Max to the skies.
Once Boeing does get the troubled plane flying again, the airline industry may look very different than it did just a few months ago. The outbreak of the novel coronavirus, COVID-19, is disrupting international travel, and multiple U.S. airlines have been warning about significant declines in demand. It remains to be seen how this will affect demand for commercial jets in the long run.
Oil majors plummet
Shares of Chevron and ExxonMobil were down big Monday morning as oil prices crashed due to developments over the weekend. A deal between Russia and members of OPEC to reduce production fell apart when Russia refused further cuts. That prompted Saudi Arabia to ramp up production and cut prices in retaliation, initiating a full-blown price war.
Indexes that track crude oil prices were down double-digit percentages in the morning. Chevron stock was down 10.2%, while Exxon stock was down 7.7%. The chaos injected into the global oil market threatens U.S. shale producers, and it could have major impacts on banks that lend heavily to the energy industry, as well as other companies dependent on oil production.
Lower oil prices are not good news for Chevron and Exxon. The stocks have already been tumbling as the coronavirus outbreak threatened to reduce demand. Now, on top of a potential demand shock, a glut of supply is pushing down prices.
How all of this ends is anyone's guess. For investors in Chevron and Exxon, it's certainly going to be a rough ride.
