Stocks plummeted on Monday even after the Federal Reserve embarked on a massive monetary stimulus campaign to curb slower economic growth amid the coronavirus outbreak.
US stocks opened sharply lower on Monday as investors grew concerned that the emergency policy measures by global central banks over the weekend meant the economy is in much worse shape than previously believed. Instead of soothing the markets, another emergency interest rate cut from the Federal Reserve had the opposite effect.
The New York Stock Exchange continued to Crash Monday after the resumption of trade, interrupted shortly after opening, in full panic around the coronavirus pandemic despite the massive efforts of the American central bank to try to reassure investors.
The Dow Jones Industrial Average collapsed around 13:50 from 11.84%, the Nasdaq, with a robust technological coloring, 11.55% and the broad S&P 500 index of 11.03%. The collapse of the S&P 500 by 7% had automatically triggered, just after the start of the session, a quarter-hour trade interruption mechanism.
The index representing the 500 largest companies on Wall Street dropped 13%, A Market Exchange stop of the same duration would take place. If he lost 20%, the session would be suspended. At the time of the suspension, the S&P 500 was collapsing by 8.14%, the Dow Jones by 9.71%, and the highly technological Nasdaq by 6.12%.
Markets face extreme volatility since the start of the coronavirus crisis, which worsened last week between the worst fall in the Dow Jones since 1987 Thursday (-10%), and its most substantial rise since 2008 Friday (+ 9.4%). The explosion of the number of cases of contamination in the world and the drastic measures of containment imposed almost everywhere panic the investors, who fear a global economic recession.
The US Federal Reserve has stepped up to the plate to try to reassure by announcing on Sunday evening as a matter of urgency a further drop in its key rate to close to zero and a vast program of asset purchases intended to flood the liquidity markets. The other major central banks have also taken steps to prevent financial trade from seizing up.
” The brokers are in shock, saying ” if they do all of this, it must be awful, ” ” said Floor Exchange broker on the Floor of the NYSE. ” And the situation is terrible. It is enough to be convinced to look at the Chinese economic data. Or the number of deaths in Italy”.
” The purpose of the Fed’s support measures is to allow the financial system to continue to function despite a severe and global supply and demand shock,” added the specialist. ” No central banker thinks that monetary policy can prevent a recession .”