Stocks plummet despite Federal Reserve efforts to stem coronavirus impact
US stocks tumbled Monday even after the Federal Reserve threw more lifelines at a national economy battered by the coronavirus pandemic.
The Dow Jones industrial average dropped as much as 513.59 points, or 2.6 percent, at the open despite the Fed’s announcement that it would place no limits on a huge bond-buying program it restarted a week ago.
That decline followed a week in which the blue-chip index fell more than 17 percent amid growing fears over the deadly bug and the devastation it threatens to the global economy. The S&P 500 and the Nasdaq composite also sank as much as 2.8 percent and 1.8 percent, respectively, in early trading following similarly brutal losses last week.
“Safe to say, the chaos of the last few weeks is going nowhere and the way this week has started, it could feasibly be the most remarkable week of the lot,” OANDA senior currency analyst Craig Erlam wrote in a commentary. “There’s no doubting that the Fed is doing everything within its power to see the economy through this period of unbelievable turmoil.”
The Fed’s latest action — coming on the heels of two emergency interest-rate cuts — led stock futures to climb into the green before the market opened, but ultimately failed to assuage markets that had been rattled by Congress’s failure to pass a large fiscal stimulus bill to stanch the economic bleeding from the virus.
Prior to the central bank’s announcement, futures had pointed to heavy losses after a trillion-dollar stimulus package failed to get through a key procedural vote in the Senate. Treasury Secretary Steven Mnuchin said Democratic and Republican lawmakers were close to a new deal Monday morning.
“I think we’re very close. We need to get this deal done today,” Mnuchin told CNBC on Monday.
Monday’s drops continued a volatile month in which the widening coronavirus crisis has sent global markets into a freefall. The virus has sparked fears of a deep recession because it has forced businesses to close and lay off workers while consumers stay shut in their homes to prevent the disease from spreading.
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