Traders work on the floor of the New York Stock Exchange (NYSE) after the opening bell of the trading session in New York, U.S., March 13, 2020. REUTERS/Lucas Jackson
(Reuters) - Wall Street looked set to crater on Monday as fears of a coronavirus-driven recession intensified following a second emergency interest rate cut in a fortnight by the Federal Reserve.
S&P 500 futures EScv1 fell 4.77% to hit a daily down limit in early trading, and S&P 500 ETFs (SPY.P) plunged 9%, suggesting the benchmark index would set off a 15-minute cutout at 7% put in place to prevent another 1987 “Black Monday”-style crash.
Central banks in the United States, Japan, Australia and New Zealand announced sweeping monetary easing in a co-ordinated effort not seen since the 2008 financial crisis, but failed to shore up global investor sentiment.
The extent of the action, taken ahead of the Fed’s regularly scheduled meeting set for Tuesday and Wednesday, spooked investors following Wall Street’s attempt at a rebound on Friday as President Donald Trump declared a national emergency and earmarked $50 billion in fiscal aid.
“We’re facing the loss of credibility of the central bank from a market perspective,” said Michael O’Rourke, chief market strategist, Jonestrading, Stamford, Connecticut.
“When the investor community loses faith in the Fed, that’s when the market gets very dangerous.”
At 5:36 a.m. ET, Dow e-minis 1YMcv1 were down 1,041 points, or 4.53%. S&P 500 e-minis EScv1 were down 128.5 points, or 4.77% and Nasdaq 100 e-minis NQcv1 were down 359.75 points, or 4.54%.
S&P 500 ETFs were down 9.1% at their lowest since January 2019.
Chucknastical on March 16th, 2020 at 12:23 UTC »
Every trading index that's open is a bloodbath.
Yikes
edit: aaaannnnnd It's gone.
GoingTibiaOK on March 16th, 2020 at 11:45 UTC »
I was listening to an economist this morning who said that the Fed cutting the rate to 0% is basically the strongest tool in the box for correcting a faltering economy. He compared it to a fire engine. Sometimes people see the fire engine go by and say “oh, good this will put out the fire,” and sometimes the say “that’s a lot of fire engines, so it must be a really big fire.” Cutting the rate to zero is a lot of fire engines, and apparently the market is thinking the fire might be too hard to put out. I hope he’s wrong.
galtright on March 16th, 2020 at 11:33 UTC »
Cheap money has been in effect for years now banks are leveraged, companies have been using cheap money to buy back stocks. Now the fed is out of ammunition.