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Dow Dives 900 Points After Surprise Fed Coronavirus Rate Cut; Trump Tweets Demand For More


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The Dow Jones Industrial Average plunged to session lows Tuesday, as it swung from a 376-point gain to a 900-point loss following the Fed's surprise rate cut.

The Dow Jones industrials dived 3.2%, the Nasdaq crashed 3.7%, and the S&P 500 shed 3.4%. Small caps tracked by the Russell 2000 tumbled 2.2%. Volume was higher on both major exchanges vs. the same time Monday.

Soon after the open, the Federal Reserve unexpectedly cut rates by a half point to help counter the economic impact of the coronavirus outbreak. It marked the first surprise cut since the 2008 financial crisis. Fed Chairman Jerome Powell said risks to the U.S. outlook "have changed materially."

President Donald Trump tweeted a demand for further easing: "The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!"


It did finish higher then the day's low

Dow 30

I wonder if people understand if the Fed goes to negative rates like Trump is asking for, they will have to pay banks to keep their money there?


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Analyst: Fed's emergency cut was 'psychologically important', may herald negative rates


The Federal Reserve's decision to cut interest rates by 50 basis points on Tuesday was "psychologically very important for the markets," according to one analyst, who also thinks rates could sink below zero as the stakes get higher in the worldwide battle to prevent a coronavirus pandemic.

Amid growing concerns surrounding the COVID-19 viral outbreak, voting members of the Federal Open Market Committee unanimously agreed to an inter-meeting rate cut by half a percentage point — the first inter-meeting cut since the 2008 financial crisis. Stocks whipsawed on the unexpected move, underscoring on the emergency rate cut.

[Take our quick poll: Do you think the stock market has bottomed?]

Greg Valliere, chief U.S. policy strategy of AGF Investments, told Yahoo Finance the Fed’s cut was "not a cure for the virus, obviously, but I say this move greatly reduces the chances of a recession."

“Still, another thing I never thought I would say and that is there’ s a chance rates could go negative in the U.S.,” he told “On the Move” in an interview. “I would guess in the next 24 hours that would be one of the big sidebars in the press that we could see rates fall even further.”

The downside is that the "saver class," which consists mostly of senior citizens, "have been hit again" because of falling yields, the analyst stated. However, Valliere expects a "tremendous amount of refinancing."

Since last week’s historic market rout, Wall Street has been calling for the Fed to move — with President Donald Trump demanding the central bank get even more aggressive.


The Federal Reserve is cuting but must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!

— Donald J. Trump (@realDonaldTrump) March 3, 2020

Valliere said the move from the Fed sends a signal as to "how seriously they took it," and that the central bank may yet move again when it meets later this month.

While some question the efficacy of monetary policy and what tools remain as rates move lower, Valliere noted there are other moves policymakers can take. These include easing up on lending standards, bridge loans to companies, grants, and maybe lifting tariffs that will "creep into the narrative over the next few weeks."



More QE?????

The more things change the more they stay the same.



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