The Federal Reserve’s historic, emergency rate cut was not enough to assuage Wall Street on Tuesday, with the Dow Jones Industrial Average plunging wildly to end the day down by almost 800 points.
Nervous traders loaded up all day on “safe haven” assets such as gold and Treasury notes — pushing yields to record levels — amid growing realization that the coronavirus might not be as fleeting as President Donald Trump’s administration has conveyed.
The Fed’s emergency rate cut Tuesday is intended to “boost household and business confidence,” mirroring action taken by central banks around the world, Fed Chairman Jerome Powell said in a press conference following the surprise announcement.
However, it spooked investors, pushing down all three major averages after he spoke. By mid-afternoon, the S&P 500 had fallen by 3.4 percent and the Nasdaq was down 3.6 percent.
“It’s great that the Federal Reserve recognizes that there’s going to be weakness, but it makes me feel, wow, the weakness must be much more than I thought,” CNBC’s Jim Cramer said. “I’m now nervous. I’m more nervous than I was before.”
Traders parsed an ever-growing list of major event cancellations, from the World Bank choosing a “virtual format” for its huge annual meeting in Washington, D.C., to Facebook pulling out of the South by Southwest event in Austin, Texas.
Tuesday’s market action comes just one day after a historic rally that saw the Dow gain the most points ever, spiking by 1,294 points at the closing bell on Monday.