The price of oil, copper, aluminum and other commodities continue to fall as the coronavirus puts a halt to international shipping.
The price of crude ended last week at its lowest level since 2008. The Dow ended Wednesday up 1,100 points, erasing a 1,000 point drop a day earlier.
The wild ride will likely continue until world health officials get control of coronavirus.
“If the virus is a long-lived affair, then we're going to see a tremendous drop in economic activity around the globe,” says Ed Hirs, economist and energy fellow at the University of Houston.
“We live in a just in time supply chain, with everything very carefully choreographed around the world,” he says. “From the production in China to the loading of the containers, to the shipping to Long Beach.”
Apple already has warned of possible delays with its new iPhone, while Amazon continues to take a hit with its vendors.
“When folks stop buying in the global supply chain, inventories stack up,” says Hirs. “Whoever has it in storage, whoever has it on a ship, they have to move the product. So it becomes a cost of holding that many suppliers really haven't factored into their equation.”