US stock markets had their worst day in more than a decade, with a crash in the oil markets that threatens to set off a chain reaction as investors remain wary of the impact of the coronavirus outbreak.

The drop on Monday was the worst seen in US stocks since December 2008, when the country's markets were in the midst of a global catastrophic financial event sparked by a housing crisis and the collapse of Lehman Brothers, which ultimately pulled the economy into a recession.

The stock market volatility led to a rare automatic halt in trading on Monday morning as investors saw prices plunge, and ultimately led to a 7 per cent drop in the S&P 500 — which was already down some 12 per cent from a high In February. The automatic halt was reversed after a 15 minute delay.

The Monday selling came after Saudi Arabia and Russia set off a price war for crude oil over the weekend, which sparked panic among investors as prices dipped more than 20 per cent in the sector. It marked the biggest oil market decline since the Gulf War.

And, as oil prices plummeted, so did shares in companies and business that service that industry. Banks and manufacturers, which are sensitive to broader economic concerns, also posted losses.

The Monday losses come after weeks of volatility on the market, as investors have struggled to understand the economic impact that might come from the coronavirus outbreak stemming from China, which has now resulted in quarantines across the globe.

"Markets want to hear that the global economy is open for business, and the problem is, it isn't easy to say that going forward," Patrick Chovanec, the chief strategist at the investment advisory firm Silvercrest Asset Management, told the New York Times.