There was some recovery in the Dow by early afternoon, with the blue-chip index paring its losses to 1,935 points, or 8.4 percent. But by mid-afternoon all gains were gone. Shortly before 2:30, the Dow was down more than 2,350 points, or 10.1 percent. The S&P 500 and tech-heavy sank 9.6 percent and the Nasdaq declined 9.8 percent.
The Dow erased most of the nearly 2,000-point jolt it got Friday after President Trump issued an emergency declaration over the coronavirus pandemic, which has disrupted nearly every aspect of American life and threatens to catapult the United States into recession. On Saturday, the House passed legislation, backed by Trump, that would spend billions of dollars on medical tests, paid sick leave for affected workers and unemployment insurance.
After an emergency meeting Sunday, the Federal Reserve announced that it would slash the benchmark interest rate to between zero and 0.25 percent (down from a range of 1 to 1.25 percent) and buy $700 billion in Treasury bonds and mortgage-backed securities. The Fed also said it would revive the crisis-era program of bond purchases known as “quantitative easing,” in which the central bank buys hundreds of billions of dollars in bonds to further push down rates and keep markets flowing freely.
The Fed intervention was its most dramatic since the 2008 financial crisis, and it comes as central banks around the world are making dramatic moves to keep the global economy running as travel grinds to halt, businesses shut their doors and people stay home to limit the spread of the virus that has killed thousands of people worldwide and been detected in dozens of countries and nearly every state. But the steep declines suggest that investors are scared the central bank might now be out of tools to guard against a recession.
“There can be no denying the Fed’s commitment to action but its dramatic move will initially stoke further debate as to whether the monetary medicine will work, on the economy or markets or both,” Russ Mould, investment director at AJ Bell, wrote in commentary Monday.