By Canadian Press

US stocks get a boost from emergency rate cut from the Fed

Mar 3, 2020 | 9:33 AM

NEW YORK — Stocks got a boost Tuesday after the Federal Reserve made an emergency cut to interest rates in hopes of shielding the economy from the effects of the fast-spreading virus.

The S&P 500 was down as much as 1.3% in the first half hour, but it shot up to a gain of 1.5% after the Fed’s announcement, then was up 0.6% in mid-morning trading.

The index had surged 4.6% Monday in anticipation of moves by the Fed and other central banks to support the global economy following the worst week for stocks since the financial crisis of 2008.

Traders have been pushing the Federal Reserve and other central banks around the world to cut rates and offer other stimulus for the economy as the fast-spreading virus shutters factories, halts travel and damages confidence.

Central banks have been the ultimate backstop for markets throughout this bull market for U.S. stocks, which began in 2009. But some critics say the medicine of lower interest rates won’t be as effective this time around because they won’t be able to re-open shut factories or call workers back from quarantines.

Meaningful Mementos

Remembering Someone You've Lost at Christmas

Dec 03, 2024

Seasonal Sorrow

How Do You Get Through The Holidays When You're Grieving?

Nov 01, 2024

Upcoming Events at Oliver's

Grief & Loss and Estate Planning Seminars

Oct 02, 2024

The Dow Jones Industrial Average was little changed as of 10:35 a.m. Eastern Time. It had surged nearly 1,300 points the day before, or 5.1%. It was the Dow’s biggest-ever point gain and its biggest percentage gain since March 2009.

European markets were also broadly higher. Asian markets climbed.

Bond yields swung after the Fed’s announcement. The yield on the two-year Treasury, which moves on anticipation of Fed actions, fell to 0.80% from 0.81% Monday. The 10-year yield, which also moves on expectations for economic growth and inflation, was at 1.08%, close to its record low.

Earlier in the day, the Group of Seven major industrialized countries pledged support for the global economy but stopped short of announcing any specific new measures. Then the Fed surpised markets with its announcement of the steep, half-point rate cut at 10 a.m. Eastern Time.

The G-7, which includes the U.S., Japan and Germany, among others, made its statement after weeks of warnings from companies that the virus will hit their finances. Economic groups have also warned of worsening forecasts for global economic growth.

Payments processor Visa is among the latest companies warning investors. It expects first-quarter revenue to suffer because of the damage to international travel. Chipmaker Microchip Technology withdrew its profit forecast for the year because of the uncertainty surrounding the virus’ impact.

Worldwide, more than 90,000 people have been sickened and 3,100 have died. The number of countries hit by the virus has reached at least 70, with Ukraine and Morocco reporting their first cases.

U.S. markets have been hit hard by fear over the virus’ impact. Stocks surged on Monday over hopes that central banks will help shield the global economy. That followed a broad sell-off last week that erased gains for 2020 and sent indexes into what market watchers call a “correction,” or a fall of 10% or more from a peak.

Several companies reported earnings as the latest round of quarterly reports nears its end. Kohl’s edged higher after it raised its dividend following a surprisingly good fourth quarter. uto parts retailer AutoZone slipped after reporting a surprising drop for a key sales measure.

___

AP Business Writer Stan Choe contributed.

Damian J. Troise, The Associated Press