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Dow Jones Industrial Average plunges as Fed cuts rates

U.S. stocks were pummeled Monday after the coronavirus pandemic fueled anxiety that the global economy was headed for a recession as countries continue to shut down global business and travel.

The Dow Jones Industrial Average plunged 2,999  points and the benchmark Standard & Poor’s 500 index dropped 12%. The broad index briefly triggered an automatic shock absorber after the opening bell when it fell more than 7%.

This marked the third time in a week that circuit breakers were set off during regular trading hours following sharp losses. 

The turbulence came after the Federal Reserve took emergency action late Sunday to cushion the economy from the deadly virus. The central bank cut interest rates and launched a fresh round of crisis-era bond purchases.

Losses accelerated in the final hour of trading Monday after President Donald Trump said the outbreak could last into the summer.

“Investors aren’t happy because these rate cuts won’t stimulate the economy in the near term. You can’t stimulate demand if everyone is stuck in their house,” says Shana Sissel, director of investment due diligence at Orion Advisor Solutions. “This isn’t a financial failure. This is a global pandemic that affects everyone across the globe. The quickest way to ramp everything back up is to provide them with a safety net in the meantime.”

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