NEW YORK, March 23 (Xinhua) — Wall Street sank in another volatile session on Monday as investors cautiously awaited further U.S. stimulus-response to offset the economic damage by COVID-19 pandemic.
The Dow shed another 3 percent to close at 18,591.93, its lowest reading since November 2016. The S&P 500 decreased 2.9 percent to 2,237.40 and the tech-heavy Nasdaq was down 0.27 percent to 6,860.67.
Ten of the 11 primary S&P 500 sectors ended lower, with energy and financials down 6.65 percent and 6.11 percent, the two worst-performing groups.
The slide came despite the Federal Reserve’s aggressive efforts to support the economy.
The U.S. central bank announced Monday morning that it will purchase U.S. treasuries and agency mortgage-backed securities with no limit to help markets function more efficiently amid coronavirus uncertainty.
“This morning’s Fed announcement transformed last week’s run-of-the-mill QE (quantitative easing) into something far more robust,” Chris Low, chief economist at FHN Financials, said in a note on Monday.
Earlier this month, the Fed made an unprecedented second emergency rate cut over just a two-week period, bringing the benchmark rate to near zero. It also launched a massive QE program, pledging to boost its bond holdings by at least 700 billion U.S. dollars as a means to keep long rates down and provide liquidity into capital markets.
The rapidly rising number of coronavirus cases in the United States overshadowed Fed’s efforts, and Wall Street awaited Washington lawmakers to agree to an economic stimulus and rescue plan to cushion the blow from the epidemic, experts noted.
Democrats and Republicans in Congress on Monday continued negotiations over a massive stimulus funding package.
The economic stimulus package, which could send direct payments to most Americans, and throw a lifeline to small businesses as well as hard-hit industries by the virus, has been stalled for the second day in a row.
The U.S. response to offset this hit to economic activity is accelerating, but for now the impact of the containment measures is still overwhelming the policy response, said UBS Global Wealth Management’s Chief Investment Officer Mark Haefele.
The number of COVID-19 cases in the United States topped 40,000 as of 1:30 p.m. U.S. Eastern Time on Monday (1730 GMT), according to the Center for Systems Science and Engineering at Johns Hopkins University.
Federal Reserve Bank of St. Louis President James Bullard warned that the U.S. unemployment rate could hit 30 percent in the second quarter as the coronavirus freezes the economy.
The International Monetary Fund said on Monday that it expects a global recession this year at least as bad as the one in 2008-09, triggered by the coronavirus pandemic.
Wall Street has suffered from extreme market volatility these days with the major averages posting dramatic single-day moves, as investors grappled with virus fears.
For the week ending March 20, the Dow shed 17.3 percent, the S&P 500 fell 14.98 percent and the Nasdaq lost 12.64 percent. The major averages had their worst weekly performances since the global financial crisis in 2008.
Looking ahead, “market developments will be determined by the answers to two key questions, including how quickly economic activity can normalize and how much policy responses can limit corporate bankruptcies and job losses,” analysts at UBS said in a note on Monday.