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Dow futures plunge 800 points after Fed surprises markets and cuts rate to zero

Stock futures dropped sharply Sunday evening after the Federal Reserve surprised markets and cut short-term interest rates to zero and launched a fresh round of crisis-era bond purchases, an emergency move to combat the economic shocks from the coronavirus pandemic.

Dow futures tumbled 800 points after the central bank lowered the Fed’s benchmark federal funds rate by a full percentage point to a range of zero to 0.25%, a range it hovered at in the aftermath of the 2008 financial crisis. 

“The market is likely taking this as a panic since the Fed couldn’t wait until their meeting on Wednesday to take action,” says Stephen Guilfoyle, founder and president of Sarge986 LLC, a family-run trading operation. 

To be sure, Sunday’s dramatic action by the Fed could “significantly” reduce stress in the financial system, according to Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association.

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