By RALPH R. ORTEGA FOR DAILYMAIL.COM
Traders are braced for another precipitous slide in shares on Monday as large swathes of the American economy began shutting down amid the coronavirus pandemic – following the CDC’s decision to advise against gatherings of more than 50 people nationwide and the Federal Reserve cut interest rates to nearly zero.
The CDC’s announcement prompted four states to ban bars and restaurants from opening – and more are expected to follow suit in a move that will cost the US economy billions.
The Dow Jones Industrial Average futures fell more than 1,000 points on Sunday, and stock futures sank after the Fed slashed interest rates to near zero.
The dips triggered ‘limit down’ levels, with contracts on the S&P 500 dropping 5% to reach a threshold made by the CME futures exchange to stem further bleeding. ‘Limit down’ means no prices can trade below that threshold, only at higher prices. TOP ARTICLES1/5READ MOREPressure grows on Education SecretaryGavin Williamson to shut down classrooms for a month
It comes as European stock index futures dropped more than four per cent with Euro Stoxx 50 futures falling 5.4 per cent to their lowest level since 2012.
Dow Jones Industrial Average futures plummeted on Sunday, triggering ‘limit down’ levels to reduce a panic (pictured) on Wall Street after the Fed slashed interest rates to near zero on the same day in response to coronavirus concerns
Dow Jones Industrial Average futures fell more than 1,000 points, also triggering limit down levels
Both halts signaled that investors were not assured after the US Federal Reserve cut interest rates for the second time in less than two weeks on Sunday
The halts occurred during non-US trading hours, before the 9:30am Eastern open of regular trading.
Both came signaling that investors were not assured after the US Federal Reserve cut interest rates for the second time in less than two weeks on Sunday in another emergency move to help shore up the US economy amid the rapidly escalating global coronavirus pandemic.
In a statement, the central bank said it was cutting rates to a target range of 0% to 0.25%.
‘The effects of the coronavirus will weigh on economic activity in the near term and poses risks to the economic outlook. In light of these developments, the committee decided to lower the target range,’ the Fed said in a statement.
‘The committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,’ the Fed said.
The central bank said it was cutting rates to a target range of 0% to 0.25%, because, ‘the effects of the coronavirus will weigh on economic activity in the near term and poses risks to the economic outlook.’ Pictured is Federal Reserve Chairman Jerome Powell
Treasury Secretary Steven Mnuchin said that both the central bank and the federal government have tools at their disposal to support the economy. Mnuchin also said he did not think the economy is yet in recession. He is pictured at a White House briefing
Policy makers, led by Chair Jerome Powell, were not due to hold their next interest-rate setting meeting until this upcoming Wednesday and Thursday.
President Donald Trump praised the Fed’s decision during a press briefing Sunday, calling it ‘really good news for the country’.
Earlier, Treasury Secretary Steven Mnuchin said that both the central bank and the federal government have tools at their disposal to support the economy.
Mnuchin also said he did not think the economy is yet in recession.
Most economists, however, believe a recession is already here, or will be soon.
JPMorgan Chase predicts the economy will shrink 2% in the current quarter and 3% in the April-June quarter.
‘I don’t think so,’ Mnuchin said, when asked if the U.S. is in recession. ‘The real issue is what economic tools are we going to use to make sure we get through this.’
The Fed already cut interest rates by half a percentage point on March 3 at an emergency meeting, the first rate cut outside of a regularly scheduled policy meeting since the financial crisis in 2008…..More Here
Click here for reuse options!