Stocks have plummeted this month as investors struggled to assess what impact the COVID-19 coronavirus may have on the economy. A U.S. recession is looking increasingly likely, although it’s not clear how deep or long-lasting it might be—if it happens. As of Thursday’s (March 12th) close, the S&P 500 was down 26.7% from its recent peak, firmly putting stocks in a bear market (generally defined as a drop of 20% or more).

The number of new COVID-19 cases has continued to rise outside mainland China, prompting some countries to embrace ever-stricter containment efforts—Italy, for example, imposed a nationwide lockdown this past week. In the U.S., authorities in some communities have urged residents to avoid crowded areas, work remotely, self-quarantine, and other measures aimed at containing the virus—all of which could reduce demand in many industries, starting with travel, hospitality and leisure.

This has already pressured not only current share prices, but also companies’ future earnings guidance. You can see from the chart below that consensus estimates for growth this year have been reduced.

Estimated earnings growth has been cut

Source: Charles Schwab, I/B/E/S data from Refinitiv, as of 03/11/2020.

Meanwhile, crude oil prices dropped sharply this past week after Saudi Arabia cut its official oil price and boosted production, a move that will flood the market with cheap oil. Brent crude prices tumbled on the news, as you can see in the chart below.

Brent crude oil prices tumbled after Saudi Arabia cut prices and raised production

Source: Charles Schwab, Bloomberg, as of 3/11/2020.