5 things to know before the stock market opens Monday - CNBC

1. Dow set to plunge at Monday's open

Traders work on the floor of the New York Stock Exchange during the opening bell on March 10, 2020 in New York.

Timothy A. Clary | AFP | Getty Images

U.S. stock futures were "limit down" 5% on Monday morning despite the Federal Reserve's announcement Sunday of a massive monetary stimulus campaign and an interest rate cut to zero.The Fed's moves, ahead this week's regularly scheduled policy meeting, were aimed at supporting the economy as the coronavirus crisis deepens in the U.S. and around the world. The exchange-traded funds that track the Dow Jones Industrial Average and S&P 500, which have no mechanisms to curb downside, were off more than 10%. When the regular session begins at 9:30 a.m. ET on Wall Street, the 7% down level on the S&P 500 would trigger the first of three "circuit breakers," pausing trading for 15 minutes.

Friday's snapback rally of over 9% from Thursday's plunge, which was the worst session since the "Black Monday" market crash in 1987, seems like a distant memory. Monday's expected decline would push the S&P 500 and the Dow further into a bear market, which is defined by a drop of at least 20% from recent highs. They hit record highs just last month.

2. Fed cuts rates and launches QE

Federal Reserve Chair Jerome H. Powell announces a half percentage point interest rate cut during a speech on March 3, 2020 in Washington, DC.

Mark Makela | Getty Images

The Fed on Sunday cut rates by 1% in an emergency move down to 2008 financial-crisis levels of 0% to 0.25%. Rates during and after the crisis stayed near zero for seven years before the first hike in 2015. In another action from the financial-crisis playbook, the Fed launched a massive $700 billion quantitative easing program. President Donald Trump said Sunday he was "very happy" with the announcement, adding, "I think that people in the markets should be very thrilled." The Fed's announcement came after it issued another emergency rate cut earlier this month. The IMF said it "stands ready" to use its $1 trillion lending capacity to help countries that are struggling with the economic impact of the coronavirus. On Capitol Hill, the GOP-controlled Senate has yet to schedule a vote on the nation's second emergency coronavirus bill, which passed the Democratic-controlled House last week.

3. CDC steps up coronavirus recommendations

A man wearing a protective mask walk around the Broadway Theatre that Broadway productions have been suspended on March 12, 2020 in New York City.

John Lamparski | NurPhoto | Getty Images

With U.S. coronavirus cases spiking to more than 3,770 with 69 deaths, the Centers for Disease Control and Prevention is urging people across America to cancel or postpone events with 50 or more attendees for the next eight weeks. The guidance doesn't apply to schools, universities or businesses. However, many public schools and colleges are closed, shifting learning online. Many companies are on work-for-home polices. New York City and Los Angeles closed bars and limited restaurants to takeout and delivery. The governors of Ohio and Illinois have also closed restaurants and bars to everything but delivery and takeout. The bar closures come before Tuesday's St. Patrick's Day, traditionally one of their busiest days of the year.

4. Many European countries on lockdown

Daily life in Venice, Italy, on March 12, 2020 after the lockdown decided by Premier Giuseppe Conte all around Italy.

Giacomo Cosua | NurPhoto | Getty Images

Across Europe, Italy, France and Spain have taken more severe steps, closing all shops except those that are essential to daily life, such as groceries and pharmacies. Coronavirus cases in Italy surged to over 24,700 with 1,809 deaths. Italy is by far the biggest hot-spot outside China, where the outbreak originated in December. China still has nearly half the global cases, which increased to nearly 170,000 with 6,513 deaths. More than 77,000 infected patients around the world are listed as recovered. Apple is closing all of its stores outside of Greater China until March 27 to reduce the risk of the coronavirus spreading. Nike is also temporarily closing all of its stores in the U.S. and in other parts of the world.

5. Biden and Sanders debate one on one

Democratic presidential hopefuls former US vice president Joe Biden (L) and Vermont Senator Bernie Sanders (R) take part in the 11th Democratic Party 2020 presidential debate in a CNN Washington Bureau studio in Washington, DC on March 15, 2020.

Mandel Ngan | Getty Images

Former Vice President Joe Biden and Sen. Bernie Sanders, the last two major candidates vying for the Democratic presidential nomination, debated Sunday night under the shadow of the coronavirus pandemic. The showdown, ahead of Tuesday's key nominating contests in Arizona, Florida, Illinois and Ohio, had moments of unity, with Biden and Sanders going after Trump, but they also clashed on the typical array of party flash points such as health care. Biden, ahead in delegates, is likely to be named the Democratic nominee to take on Trump unless something dramatic changes about the state of the race. Sanders, ideologically to the left, gave no sign that he intends to give up the nomination without a fight.

— Follow the markets in real-time all day long with CNBC's market blog online. Click here.

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2020-03-16 13:18:38Z
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Stocks - U.S. Futures Suspended Limit Down Despite Fed Moves - Investing.com

© Shutterstock

By Peter Nurse    

Investing.com - U.S. stocks are set to post hefty losses at the open Monday, with investors greeting Sunday’s moves by the Federal Reserve to mitigate the economic damage from a spreading coronavirus pandemic with mounting anxiety.

At 7:05 AM ET (1105 GMT), futures for the traded 4.8% lower, futures for the  down 4.6%, while the fell 4.6%. These contracts were suspended after plunging to hit their daily limits, suggesting the cash markets could open even lower.

The Federal Reserve held an emergency meeting Sunday, cutting short-term rates to a target range of 0% to 0.25%, announcing at least $700 billion in purchases of Treasuries and mortgage-backed securities in coming weeks and offering cheap dollar financing to financial institutions around the world facing stress in credit markets.

These moves come as governments around the world sought to stem the spread of the virus that has infected over 169,000 people globally and killed more than 6,500.

In the U.S., there have been school closings, runs on grocery stores, shuttered restaurants and retailers, and ends to sports events. 

Shares in United Airlines (NASDAQ:) dropped over 16% in premarket trading after the company said it’s slashing its flight schedule by 50% for the next two months, seeing revenue in March down $1.5 billion from last year. Shares in American Airlines (NASDAQ:) and Delta Airlines (NYSE:) are also sharply lower.

Shares in Apple (NASDAQ:) fell over 11% in premarket trading after announcing it is closing all of its stores outside greater China until at least March 27. This matches the response of a number of retailers, including Nike (NYSE:) and Urban Outfitters (NASDAQ:).

Shares in cruise operator Carnival (NYSE:) dropped over 20% premarket after it cancelled all its North American cruise lines for at least a month, amid a drop in global demand for holidays due to the spread of coronavirus.

Elsewhere, the oil market has been hammered by the combination of a hit to demand from the economic slowdown caused by the coronavirus and a price war between Saudi Arabia and Russia, two of the globe’s largest producers.

AT 07:10 AM ET (1110 GMT), futures traded 6.5% lower at $30.03 a barrel. The international benchmark contract fell 9.4% to $30.66. 

Additionally, fell 2.7% to $1,474.10/oz, while the traded at $1.1160, up 0.5%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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2020-03-16 11:42:49Z
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Apple fined a record $1.2 billion by French antitrust authorities - CNBC

The facade of the new Apple Store Champs-Elysees is seen during the press visit on November 15, 2018 in Paris, France. Apple will open its largest French store on the Avenue des Champs-Elysees in Paris this Sunday, November 18, 2018.

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Apple was fined 1.1 billion euros ($1.23 billion) for anti-competitive behavior Monday by the French antitrust authorities.

The French competition authority said the iPhone maker was guilty of cartels within its distribution network and abusing the economic dependence of its independent re-sellers. 

Two of Apple's wholesalers were also fined for agreeing on prices: Tech Data and Ingram Micro received fines of 76.1 million euros and 62.9 million euros respectively. Both companies were not immediately available for comment when contacted by CNBC.

The French authority said this penalty — totaling 1.24 billion euros — was the largest ever handed down in one case.

"Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products," Isabelle de Silva, President of the French Competition Authority, said in a statement.

A spokesperson for Apple told CNBC: "The French Competition Authority's decision is disheartening. It relates to practices from over a decade ago and discards thirty years of legal precedent that all companies in France rely on with an order that will cause chaos for companies across all industries. We strongly disagree with them and plan to appeal."

Monday's announcement is the second fine that French authorities have imposed on Apple in two months. The regulators hit Apple with a 25 million euro fine in February over its software updates, which were concluded to have slowed down older iPhones.

Apple shares were down over 11% in extended-hours trading Monday morning, amid a broad-based move lower in stock markets. 

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2020-03-16 12:19:50Z
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'This is war': Stocks, oil, Treasury yields, and bitcoin plunge as the Fed's rate cut fails to allay coro.. - Business Insider

Andrew Burton/Getty Images

• Stocks, oil, Treasury yields, and bitcoin dropped on Monday as investors worried about coronavirus choking growth despite the Federal Reserve's surprise interest-rate cut on Sunday.
• The US central bank cut rates by a full percentage point to between 0% and 0.25%, marking its second cut in less than two weeks.
• "The Federal Reserve has panicked. It didn't just fire its bazooka, it dropped an atom bomb of liquidity and monetary stimulus," one analyst said.
• Chinese economic data revealed steep declines in industrial output, fixed-asset investment, and retail sales in January and February, underscoring the economic threat of coronavirus.
• Visit Business Insider's homepage for more stories.

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Stocks, oil, Treasury yields, and bitcoin all slumped on Monday after the Federal Reserve's surprise interest-rate cut on Sunday failed to allay investors' concerns about the economic fallout from the coronavirus pandemic. US equity futures also reached the "limit down" band preventing declines of more than 5%.

The US central bank slashed the key funds rate by a full percentage point to between 0% and 0.25%, the lowest level since 2015, after lowering it by 0.5 percentage points less than two weeks ago. It also announced plans to buy $700 billion worth of Treasuries and mortgage-backed securities.

"The Federal Reserve has panicked," Neil Wilson, chief market analyst for Markets.com, said in a morning note.

"It didn't just fire its bazooka, it dropped an atom bomb of liquidity and monetary stimulus," he added.

Central banks in China, Japan, Australia, New Zealand and other countries followed the Fed in trimming rates, boosting market liquidity, and taking other measures to shore up their economies. However, investors remain skeptical that monetary policy can do much to temper the economic toll of coronavirus.

The virus — which causes a disease called COVID-19 — has infected more than 169,000 people, killed at least 6,500, and spread to upwards of 145 countries. It threatens to hammer global economic growth this year by disrupting supply chains, forcing businesses to cut back or close, and deterring consumers from spending.

The latest developments include President Donald Trump declaring a national state of emergency on Friday, the Centers for Disease Control and Prevention (CDC) recommending the postponement of any planned gatherings of 50 people or more in the next eight weeks, and Los Angeles and New York City shutting down bars, clubs, and other entertainment venues to slow transmission of the virus.

New Chinese government data provided a worrying preview of the economic impacts of coronavirus. In the first two months of this year, industrial output tumbled 13.5% to a record low, retail sales plunged 20.5%, and fixed-asset invement fell by 24.5%, according to the Financial Times. Urban unemployment also hit a fresh high of 6.2% in February, the newspaper said.

"There's an understanding in markets that a recession is almost guaranteed," Jasper Lawler, head of research at London Capital Group, said in a morning note.

"Authorities throwing money at it helps but cannot stop it," he added.

Other analysts painted an equally bleak picture.

"Markets must now accept: This is war," Michael Every, senior Asia-Pacific strategist at RaboResearch, said in a research note.

"Governments are going to have to support households, the self-employed AND businesses large and small through this all, or we face a domino-style economic collapse," he continued.

"The big policy guns have now all been rolled out and fired," Every added. "Short of open helicopter money entering while playing The Flight of the Valkyries over loudspeaker, there is little left to do already."

Here's the market roundup as of 11:51 a.m. in London (7:51 a.m. in New York):

• European equities plunged, with Germany's DAX down 8.4%, Britain's FTSE 100 down 6.8%, and the Euro Stoxx 50 down 8.7%.
• Asian indexes closed lower. China's Shanghai Composite fell 3.4%, South Korea's KOSPI slumped 3.2%, Japan's Nikkei dropped 2.5%, and Hong Kong's Hang Seng fell 4.7%.
• US stocks are set to open lower. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq reached their "limit down" bands of 5%, and were down between 4.5% and 4.8% at the time of writing.
• Oil prices fell, with West Texas Intermediate down 7.6% at $29.70 a barrel and Brent crude down 10.4% at $30:30.
• The benchmark 10-year Treasury yield fell to about 0.76%.
• Gold slid 3.8% to $1,459.
• Bitcoin dropped about 16% to below $4,600.

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2020-03-16 12:05:02Z
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Here's why global stocks are plunging despite the 'big bazookas' from central banks around the world - Business Insider

Foto: Reuters Federal Reserve Chairman Jerome Powell

• Global stocks plunged on Monday morning, despite a decision from the Federal Reserve to cut rates by 100 basis points on Sunday night.
• Markets seem to be ignoring the global coordinated response from central banks as sell-off deepens.
• On Sunday night, the Fed slashed its benchmark interest rate by 100 basis points to near zero. The Fed’s key rate is now 0% to 0.25%, matching the record low it was last at in 2015. The Fed also announced it will increase its bond holding by $700 billion.
• Visit Business Insider’s homepage for more stories.

Markets across the world are plunging, despite the massive stimulus package announced by the U.S. Federal Reserve on Sunday night.

On Sunday night, the Fed slashed its benchmark interest rate by 100 basis points to near zero. The Fed’s key rate is now 0% to 0.25%, matching the record low it last occupied in 2015. The Fed also announced it will increase its bond holding by $700 billion.

The move from the Fed is part of a global response from central banks meant to curb growing economic uncertainty caused by the coronavirus pandemic.

However, financial markets across don’t seem impressed by the level of stimulus being pumped into the economy by central banks.

„Make no mistake, what the Federal Reserve did last night was remarkable, but the global economy is grinding to a halt – no amount of central bank liquidity can contend with that,“ Neil Wilson, chief markets analyst at Markets.com said in a note Monday morning.

„Markets are pricing for 2020 earnings to tumble and for a global recession. The kind of damage will be lasting in many sectors, far longer lasting than the virus outbreak itself,“ Wilson said.

US futures plummeted on Sunday evening after the Fed announcement, triggering emergency measures to implement a price floor and stop steep losses. In Europe, stocks plunged on Monday, with the pan-European Stoxx 600 down 8% at the start of trading. Stocks in Asia tumbled as well with the Australian stock index down nearly 10% at the end of the trading session.

The negative reaction from markets shows the lack of confidence that traders have with central bank’s actions in the current market environment. It also means that investors are starting to think that central banks are running out of ammunition.

It also shows that investors expect more than just monetary policy to tackle the growing coronavirus pandemic.

While a number of governments have announced fiscal stimulus, the general expectation is for a bigger and coordinated response from governments.

Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a morning note titled „Biz Bazookas Everywhere,“ said that central banks around the world have deployed huge amount of monetary weapons. However, he said, critical industries such as tourism and air transport find themselves „at the edge of the cliff.“

Governments around the world will now have to decide whether to pump in additional stimulus to save these industries or let some of them collapse, Halley said.

Meanwhile, a number of analysts expect the financial market sell-off to continue till the uncertainty of the virus eases off.

„Until we see an end in sight for the virus and the number of infections globally peak, markets are going to be extremely volatile, and it’s likely going to get worse before it gets better, so investors must brace themselves in the near term,“ according to a morning note from Adrian Lowcock, head of personal investing at investment platform Willis Owen.

„However, once the infection rate peaks and the world gets back to some semblance of normality, markets could snap back as fast as they fell. Trying to time this is impossible, so investors must try to ride out this crisis as best they can without giving in to fear,“ Wilson said.

Last week the Bank of England cut its benchmark interest rate by 50 basis points and the government launched a £30 billion fiscal stimulus package.

Meanwhile, the European Central Bank (ECB) launched an additional quantitative easing, or bond-buying, package of 120 billion euros. This on top of its 20 billion euros asset purchase.

„The Fed and other Central Banks have now used the majority of the monetary policy stimulus available to them and now the onus is on the government to implement fiscal measures in order to stem the economic damage from the coronavirus outbreak,“ Adam Vettese, an analyst at multi-asset investment platform eToro said in a morning note.

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2020-03-16 10:12:12Z
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Global stock markets, US futures fall after Fed rate cut - USA TODAY

Joe Mcdonald Associated Press

Published 5:55 AM EDT Mar 16, 2020

BEIJING – Global stock markets and U.S. futures fell Monday after central bank moves to shore up economic growth failed to dispel investor’s fears over anti-virus controls that are shutting down global business and travel.

There were no glimmers of optimism: Paris tumbled 9% shortly after the open, London sank 7% and Frankfurt gave up 7.5%. In Asian trading, Sydney’s benchmark plunged 9.7%, Hong Kong’s Hang Seng lost 3.4% and India shed 5.9%. 

Tokyo closed 2.5% lower after Japan’s central bank expanded asset purchases to inject money into the economy and promised no-interest loans to help companies cope with the crisis. Chinese shares fell after Beijing reported consumer spending and factory output were even worse than expected.

On Wall Street, futures for the benchmark S&P 500 index and Dow Jones Industrial Average were off nearly 5% following Sunday’s emergency rate cut by the Federal Reserve.

The Fed cut its key rate by a full percentage point – to a range between zero and 0.25%. The central bank said it would stay there until it feels confident the economy can survive a near-shutdown of activity in the United States.

“Despite whipping out the big guns,” the Fed’s action is “falling short of being the decisive backstop for markets,” said Vishnu Varathan of Mizuho Bank in a report. “Markets might have perceived the Fed’s response as panic, feeding into its own fears.”

The Fed action came as Western governments expanded travel curbs and closed more public facilities, raising the cost of efforts to contain the outbreak that has infected nearly 170,000 people worldwide. China, where the coronavirus emerged in December, accounts for about half of those, but a dozen other countries have more than 1,000 cases each.

London’s benchmark FTSE 100 index lost 6.9% to 4,995.46. Frankfurt’s DAX shed 7.6% to 8,532.05. The CAC 40 in France sank 8.8% to 3,755.99.

The S&P 500 future was down 4.8% and the Dow’s was off 4.6%.

The S&P 500 future fell 5% on Sunday night following the Fed’s announcement, triggering a temporary trading halt.

The Fed said it also will buy at least $500 billion of Treasury securities and $200 billion of mortgage-backed securities. This amounts to an effort to ease market disruptions that have made it harder for banks and large investors to sell Treasuries and to keep longer-term rates borrowing rates down.

That followed a dizzying week in which the Dow twice fell by more than 2,000 points and also record its biggest point gain ever – 1,985 points on Friday. The bull market that began in 2009 in the depths of the financial crisis came to an end. 

In Sydney, the S&P-ASX 200 fell to 5,002.00. Hong Kong’s Hang Seng tumbled to 23,063.57. In India, the Sensex retreated 6.6% to 31,812.12.

The Shanghai Composite Index declined 3.4% to 2,789.25 after the government reported retail sales fell 20.5% from a year ago in January and February after shopping malls and other businesses were closed. Factory output declined by a record 13.5% after the Lunar New Year holiday was extended to keep manufacturing workers at home. 

The figures were even bleaker than economists expected. Some cut their forecasts for the world’s second-largest economy. ING said this year’s growth might fall as low as 3.6%, the weakest since at least the 1970s.

The Bank of Japan’s decision to expand purchases of stocks, corporate bonds and other assets viewed as riskier than Japanese government bonds fell flat.

The Nikkei 225 in Tokyo sank to 17,002.04 while Seoul’s Kospi lost 3.2% to 1,714.86.

The BOJ also announced plans to provide up to 8 trillion yen ($75 billion) in no-interest, one-year loans to companies that face cash crunches.

Bank of Japan Gov. Haruhiko Kuroda has pledged to do whatever is needed to help buttress an economy that contracted by 7.1% in the last quarter, even before the virus hit.

Over the weekend, Spain followed Italy’s lead in imposing nationwide curbs will allow its 46 million people to leave home only to go to work, to buy food and medicine or on errands to care for the young and elderly. 

In the Philippines, soldiers and police sealed off the crowded capital, Manila, from most domestic travelers.

New York City announced it will shut down the largest U.S. public school system as early as Tuesday, sending more than 1.1 million children home. Governors in California, Illinois and Ohio told all bars and restaurants to close or reduce their number of customers.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. But severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.

There are 169,000 confirmed cases of the virus worldwide, according to a tally by Johns Hopkins University. Most of the world’s 77,000 recovered patients are in China.

Experts expect the disruptions to travel and even to daily life to last for weeks, possibly months. 

Brent crude lost $2.10 to $31.84 per barrel in London. Benchmark U.S. crude tumbled $1.29 to $30.44 per barrel in electronic trading on the New York Mercantile Exchange.

In currency markets, the dollar declined to 106.35 yen from Friday’s 107.91. The euro gained to $1.1196 from $1.1105.

JPMorgan Chase now is forecasting the U.S. economy will shrink at a 2% annual rate in the current quarter and 3% in the April-June quarter.

The Fed’s decision to act before a meeting scheduled for mid-week indicated its policymakers felt they needed to move immediately to shore up investor confidence. Most market watchers expect more volatility ahead because the number of U.S. virus cases is rising and more industries face a downturn.

United Airlines said it needs to cut flying capacity by 50% in April and May and expects the cuts to extend into the summer travel season. American Airlines said it cutting international flying 75%.

Walmart is limiting hours to ensure stores can keep sought-after items such as hand sanitizer in stock. Late Friday, Apple said it was closing all retail stores outside of China.

The magnitude of the central bank moves indicated to some analysts that Chair Jerome Powell and other members of the Fed were worried about the health of the financial system. But others noted the Fed was just reacting to signs the situation in Europe and the U.S. was only getting worse.

“The Fed’s actions were very bold and it does appear to have spooked the markets,” said Nate Thooft, head of global asset allocation at Manulife Investment Management.

“Markets were going to be spooked anyway due to the scale of the shutdowns across the U.S. and sobering implications of a $20 trillion dollar economy that is about to grind down to a crawl,” said Yung-yu Ma, chief investment strategist at BMO Wealth Management.

“Also, developments in Europe are raising the prospect that what was just a week ago considered ‘worst case’ might be closer to ‘base case’ for the U.S.,” Ma said. “Big picture, the Fed’s actions are all positive.”

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The Associated Press receives support for health and science coverage from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.

More: Stocks poised for plunge Monday as Dow futures drop 1,000 points despite Fed rate cut to zero

More: Fed cuts rate to zero, launches more bond purchases in historic moves to fight coronavirus

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2020-03-16 09:45:00Z
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Fed Cuts Interest Rates To Near Zero, Citing Coronavirus Economic Impact - NPR

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Federal Reserve Chairman Jerome Powell has been a frequent target of President Trump, who has urged the central bank to slash interest rates more aggressively. Eric Baradat/AFP via Getty Images hide caption

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Eric Baradat/AFP via Getty Images

Updated at 5 a.m. ET on Monday

European shares dropped more than 8% on Monday, led by losses in Italy and France, the two countries hardest-hit by the coronavirus pandemic that has girdled the globe in recent weeks, infecting tens of thousands of people, severing supply chains and slowing commerce as people are forced to stay home.

In early trading, Italy's FTSE MIB, France's CAC 40 and Germany's DAX were all down more than 8%, with London's FTSE 100 just behind, dropping more than 7%.

The steep fall in Europe, which has become the new epicenter of the COVID-19 epidemic that started in China, came as Asian stocks also took a big hit. In Hong Kong, the Hang Seng index fell just over 4% and Japan's Nikkei 225 lost nearly 2.5%. The Shanghai Composite Index lost nearly 3.5%.

The drubbing for stocks follows the U.S. Federal Reserve's cut in its key interest rate to near zero, a dramatic move not seen since the depths of the 2008 financial crisis. The Fed's move was made in coordination with efforts to buttress the global economy by the Bank of England and the Bank of Japan.

The one-percentage-point decrease was the U.S. central bank's second emergency rate cut this month in an attempt to cushion the rapidly growing economic effects of the coronavirus pandemic.

The Fed also announced plans to buy $700 billion in government securities.

"The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook," the Fed said in a statement announcing the moves Sunday. "In light of these developments, the [Federal Open Market] Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent."

Fed Chairman Jerome Powell, speaking with reporters on a conference call, 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."

The federal funds rate affects the cost of borrowing on everything from credit cards to auto loans.

President Trump — who has often slammed the Fed for first raising rates and then not cutting them more quickly — praised the actions minutes later.

"It's really great news" and "great for our country," Trump told reporters at the White House, adding that the Fed's announcement should cheer financial markets. Just on Friday, Trump had said he could demote Fed Chairman Jerome Powell, whom he had appointed, from the top job at the Fed.

But U.S. stock market futures dove after the Fed's announcement. Futures in the Dow Jones Industrial Average fell more than 1,000 points.

In cutting its key interest to zero, the Fed has practically lost a major policy tool — one that it would need if the economy tumbles into recession. But the Fed said its policymaking committee "will continue to closely monitor market conditions and is prepared to adjust its plans as appropriate."

Low rates make borrowing cheap, but they don't necessarily get businesses to increase workers' hours or get people shopping at a time when government officials are asking bars and restaurants to shut down and telling workers to stay home to stall the spread of the virus.

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In addition to the rate cut, the Fed also announced measures to "support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities." It said it will boost its holdings of Treasurys by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion in coming months.

Global financial markets have been shaken deeply by the growing pandemic. And U.S. stock indexes have plummeted at least 20% from their recent record highs — putting the market in bear market territory after an 11-year winning streak. The Dow has fallen nearly 6,400 points since its record high on Feb. 12.

On Friday, the Dow jumped 9.3%, or 1,985 points, after posting its worst day since the Black Monday crash of October 1987. That rebound came as Trump declared a national emergency and announced several steps to deal with the coronavirus crisis. But the Dow still lost nearly 2,700 points for the week.

"The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States," the Fed said Sunday.

The Fed last cut rates to near zero in December 2008, during the financial crisis, and kept them at that historic low until the end of 2015.

Sunday's emergency move was highly unusual because it came between scheduled Fed meetings. The Fed's next meeting is set for this Tuesday and Wednesday.

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2020-03-16 09:50:43Z
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