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Stocks fall after Federal Reserve cuts interest rates

The Dow fell nearly 800 points Tuesday and 10-year Treasury yields dipped below 1% for the first time ever in a day of wild swings triggered by a surprise Federal Reserve rate cut and the latest news of the coronavirus’s spread.

After the Fed lowered its key interest rate by half a percentage point earlier in the day, the Dow Jones industrial average surged more than 400 points before tumbling as much as 900 points. The rate cut was aimed at supporting the economy and financial markets but may have had the opposite effect, analysts say.

“It was perhaps a sign the Fed is concerned about the economy,” says Ryan Detrick, senior market strategist for LPL Financial. “Maybe things are a little worse than we thought.”

The central bank may have been better off trimming rates by just a quarter percentage point and then cutting by another quarter-point at its March 17-18 meeting, says Nick Reece, senior analyst at Merk Investments.

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