Statements by fed Chairman Jerome Powell, and emergency lowering base interest rates by the Fed had to reassure traders, but everything turned up, but on the contrary. Earlier it was reported that the Federal Committee on open market operations (FOMC) will lower the interest rate on Federal funds by 0.5 percentage points - up to 1-1. 25% per annum on Tuesday 3 March. You should pay attention that the last time the fed was urgently cut rates between scheduled meetings during the financial crisis of 2008.
Powell commented on the fed's decision and indicated that the U.S. economic fundamentals remain stable, but the spread of the coronavirus brought new risks and challenges. Therefore, the U.S. economy remained strong, the decline rates have become a forced necessity.
The first reaction of stock market to the fed's decision was positive, as the index rose sharply, but after the press conference, Powell, price sharply went on the decline.
As noted responsible for investment strategy at QS Investors Mike Labelle - “Monetary policy can hardly be considered a treatment for coronavirus. Mitigation policy is likely to slightly improve the mood of investors in the short term, however, as long as the epidemic of the coronavirus will not pass its peak, the high market volatility will continue.”
Alas, the actions of the Federal reserve failed to maintain positive moods among traders, the consequence of which was the decline in the yields of US Treasury bonds to record lows. In particular, the yield on 10-year US Treasuries fell below 1%.
But the futures on US stock indexes added to 1,2-1,3%. The reason for this was information that former Vice-President of the USA Joe Biden wins, at least in eight States in the primaries in “super Tuesday.”
The Dow Jones Industrial Average to closing of the market on Tuesday fell to 785,91 points (2.94 per cent) and amounted to 25917,41 points, Standard & Poor's 500 dropped 86,86 paragraph (2,81%) - to 3003,37 points, and the Nasdaq Composite lost 268,08 paragraph (2,99%) and amounted to 8684,09 points.
Shares Of Qorvo Inc., supply components for Apple (NASDAQ:AAPL), fell by 2.1%. The company downgraded revenue forecast for the fourth finkvartal against problems with supply, due to the outbreak of coronavirus. A similar situation occurred with the assets of Visa Inc. (NYSE:V). since the action of the operator of the largest U.S. payment system, fell 3.4% as the company lowered revenue forecast for the current finkvartal due to the effects of the spread of coronavirus.