Wall Street traders went running for cover Monday — and even a steep and surprise drop in interest rates couldn’t calm them.
Trading was halted shortly after markets opened and the Dow Jones Industrial Average fell 1,820.41 points, or 7.9 percent, to 21,365.21 — pushing the market even further into bear territory.
The decline is an about-face from Friday, when a national emergency was declared by President Trump, unlocking $50 billion in funds and reassuring investors. But over the weekend it became clear that the fallout from the coronavirus was only just starting in the U.S., not ending.
Jerome Powell, chairman of the Federal Reserve, said: “Families, businesses, schools, organizations and governments at all levels are taking steps to protect people’s health. These measures, which are essential for containing the outbreak, will nonetheless understandably take a toll on economic activity in the near term. While the primary response to this challenge will come from our health-care providers and policy experts, economic policymakers must do what we can to ease hardship caused by the disruptions to the economy and to support a swift return to normal once they have passed.”
The Fed slashed its benchmark federal funds rate by 1 percentage point late Sunday, to a range of 0 to 0.25 percent, from 1 percent to 1.25 percent after a less-drastic cut last week.
Investors love lower interest rates almost more than anything, since they help consumers and companies spend and can also make more funds available for trading. But that the ultra-low rates didn’t buoy markets speaks to the severity of the situation.
Markets fell sharply in Europe earlier in the day and Wall Street followed.
Among the hardest-hit companies trading in the U.S. were Signet Jewelers, down 38.3 percent to $8.75; G-III Apparel Group, 27.1 percent to $11.07; Capri Holdings., 26.2 percent to $10.29; Gap Inc., 23.6 percent to $8.26; RealReal Inc., 19.3 percent to $7.02; Tapestry Inc., 19.3 percent to $13.10; Simon Property Group Inc., 17.2 percent to $74.32, and Nordstrom Inc., 17 percent to $17.93.