U.S. stocks tumbled Tuesday despite the Federal Reserve’s emergency enactment of an interest rate cut meant to reassure markets that the coronavirus outbreak wouldn’t lead to a downturn.
The Dow Jones Industrial Average was down 2.97% at closing, losing nearly 800 points.
The S&P 500 and Nasdaq composite also closed sharply down, 2.82% and 2.99%, respectively.
The 10-year U.S. Treasury note temporarily fell below 1% earlier on Tuesday. It was the first time the bond had ever been that low.
The huge drop in stock prices came on the heels of the central bank cutting its interest rate target by half a percentage point. The Fed’s short-term interest rate target is now between 1% and 1.25%. The markets first reacted positively to the announcement before giving up the gains that were made.
Federal Reserve Chairman Jerome Powell told reporters at a hastily convened press conference Tuesday that the coronavirus poses a risk to the U.S. economy.
“In the last couple of weeks, we’ve seen a broader spread of the virus,” Powell said. “We’ve seen it begin to spread a bit in the United States … So, we saw a risk to the outlook of the economy, and we chose to act.”
The Fed will meet next on March 18 to decide next steps on the interest rate.
