Wall Street pounded as Federal Reserve`s shock move raises Coronavirus impact alarm

New Delhi: US stock indexes plunged about 8% on Monday, as investors dumped risky assets for cash after the Federal Reserve`s drastic move to cut interest rates to near-zero amplified worries over the extent of damage from the coronavirus pandemic.

The benchmark index slid as much as 11.4% early in the session, shedding about $2 trillion in market value before bargain hunting helped the main indexes claw back some losses. Trading on Wall Street`s three main stock indexes was halted for 15 minutes shortly after the open as the S&P 500 index plunged 8%, crossing the 7% threshold that triggers an automatic cutout.

The Fed`s second emergency interest rate cut in less than two weeks and its pledge to purchase more than $700 billion in assets came ahead of its scheduled policy meeting on Tuesday and Wednesday, adding to the alarm about the pandemic that has paralyzed parts of the global economy and squeezed company revenue.

"There is a risk when the Fed takes such aggressive measures that investors say, `Gee, do they know something that we don`t know?`," said Danielle DiMartino Booth, chief strategist at Quill Intelligence in Dallas, Texas. "I don`t think that with the way the markets are behaving, the central banks right now have much in the way of options. They have to be aggressive right now."

Underscoring the economic blow of the outbreak, severe virus containment measures sent China`s factory production tumbling at its fastest pace in three decades.

Rate-sensitive financial stocks tumbled 11.1%, leading declines among the major S&P sectors. The sector also came under pressure after the big U.S. banks halted their share buybacks.

Energy stocks tracked a near 10% slump in oil prices, while technology stocks lost 9.2%. Heavyweights Apple Inc, Microsoft Corp, and Facebook Inc fell at least 7% and were the biggest drags on the S&P 500.

Wall Street`s fear gauge jumped 21.15 points to 78.98. The markets should stay open despite the intense volatility, the head of the U.S. securities regulator said, quashing speculation that the government might shut down the country`s exchanges to stop the plunge in stock prices.

As bars, restaurants, theaters and movie houses in New York and Los Angeles were ordered shut, US states pleaded with the Trump administration to coordinate a national response to the outbreak.

Nike Inc, Lululemon Athletica Inc and Under Armour Inc said they would close stores in the United States and some other markets, dragging the S&P 500 retail index 8% lower.

The S&P 1500 airlines index slumped 9.4% after United Airlines Holdings Inc booked $1.5 billion less revenue in March and warned employees that planes could be flying nearly empty into the summer.

At 12:55 p.m. ET, the Dow Jones Industrial Average was down 2,119.07 points, or 9.14%, at 21,066.55 and the S&P 500 was down 231.58 points, or 8.54%, at 2,479.44. The Nasdaq Composite was down 656.07 points, or 8.33%, at 7,218.81.

Declining issues outnumbered advancers for a 13.24-to-1 ratio on the NYSE and a 9.58-to-1 ratio on the Nasdaq. The S&P index recorded no new 52-week highs and 325 new lows, while the Nasdaq recorded three new highs and 1,238 new lows.

The Dow will wipe out the entire Trump-bump if the blue-chip index falls another 1,500 points from current levels. The index would trade at levels seen before Donald Trump assumed office on Jan.20, 2017.