Stock trading halted again as Fed cuts fail to stop market plunge

Stock trading halted again as Fed cuts fail to stop market plunge

Wall Street stocks plunged more than 10 per cent early Monday (March 16) as panic over the economic hit from the coronavirus outbreak offset emergency moves by the Federal Reserve. Last week's drops also confirmed the end of the longest-ever bull market on Wall Street, which emerged from the financial crisis and ran for almost 11 years.

That meeting was followed by a weekend full of pronouncements from cities and states across the US urging Americans to self-quarantine and shuttering non-essential businesses like bars, restaurants, and entertainment venues in an effort to enforce social distancing, amid an ongoing rise in cases.

S&P 500 e-minis fell 128.5 points, or 4.77%.

At 12:55 p.m. ET, the Dow Jones Industrial Average was down 2,119.07 points, or 9.14%, at 21,066.55 and the S&P 500 was down 231.58 points, or 8.54%, at 2,479.44.

If these markets seize up, it could feed back into the United States economy. However, Trump later predicated that "once this virus is gone ... you're going to have a stock market like no one's ever seen before".

In morning trading, all three main Wall Street exchanges-the Dow, Nasdaq, and S&P 500-fell over 10 percent, with the Dow briefly falling as low as 12 percent.

After an emergency meeting, the Federal Reserve announced Sunday that it would slash the benchmark interest rate to between zero and 0.25 percent (down from a range of 1 to 1.25 percent) and buy $700 billion Treasury bonds and mortgage-backed securities. The markets should stay open despite the intense volatility, the head of the USA securities regulator said, quashing speculation that the government might shut down the country's exchanges to stop the plunge in stock prices.

Hedge funds and other investors will have to give regulators more information about the bets they are taking, the European Union's markets watchdog announced on Monday, warning that a markets slump triggered by the coronavirus could last weeks.

The yield on the 10-year Treasury slid to 0.73% from 0.95% late Friday, a sign that investors are flocking into investments seen as safe.

Many parts of the economy have abruptly come to a standstill. China, where the coronavirus emerged in December, accounts for about half of those, but a dozen other countries have more than 1,000 cases each.

Other experts agreed with that as the trigger point for the swift selloff over the final 30 minutes of trading.

The move was created to bring down the price banks and companies pay to access US dollars, which has surged in recent weeks as the pandemic spooked investors. That includes targeted aid to industries hit hard by the virus, as well as checks sent out to households.

But with so many unknowns surrounding the coronavirus outbreak, investors took little solace from the Fed's extraordinary actions. "Lower rates will not create demand when people are home", said Solita Marcelli, deputy chief investment officer for the Americas at UBS Global Wealth Management. Oil prices fell about 5% and gold rose.

"This is not a two-week event", he added. "It's the most important variable in the market by a mile", said Sevens Report Research founder Tom Essaye via email.

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