Oil’s Fall Continues Into 2015, and Stock Markets Shudder

By Clifford Krauss and Peter Eavis

Oil prices tumbled below $50 a barrel on Monday, spooking global financial markets and signaling that the remarkable 50 percent price drop since June was continuing this year and even quickening.

The new drop in American and global benchmarks of more than 5 percent was accompanied by reports of increased Middle Eastern oil exports, continuing increases in American production and renewed worries about the declining economic fortunes of Europe.

The plunge once again sent fear through global markets. The Standard & Poor’s 500-stock index fell 37.62 points, or 1.83 percent, to 2,020.58. The Vix, a measure of market volatility that is known as Wall Street’s fear gauge, leaped about 12 percent. And in Tokyo, the Nikkei 225 tumbled more than 2.5 percent Tuesday in morning trading.

In response, investors sought safety in government bonds around the world. As bond prices rose, the yield on the 10-year Treasury note fell to 2.03 percent on Monday.

The decline in oil was not the only source of concern in the markets.

Worries about Greece’s ability to stay in the eurozone have reasserted themselves in recent days, for instance. The dollar continued its surge against the euro on Monday.

Still, as the oil price decline has continued, investors have increasingly seen it as a bad omen for the global economy. The drop may point to lower demand for oil and lower economic activity. And the decline suggests that policy makers have not managed to deal with the threat of deflation, or falling prices.

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