Dow sinks 2.9% after rate cut fails to stem market’s dread of virus

NEW YORK (AP) — The Dow Jones Industrial Average dropped 785 points and bond prices surged after an emergency interest-rate cut by the Federal Reserve failed to reassure markets racked by worries that a fast-spreading coronavirus outbreak could lead to a recession.

The yield on the 10-year Treasury note dropped below 1% for the first time.

The Dow industrials lost 2.9% to 25,917. It had surged 5% a day earlier on hopes for a broader set of stimulus measures.

The S&P 500 index fell 2.8% and is now 11% below the record high it set two weeks ago. The Nasdaq fell 3%.

Federal Reserve Chairman Jerome Powell said at a news conference that the virus “will surely weigh on economic activity both here and abroad for some time.”

It was the Fed’s first rate cut since last year, when it reduced its key short-term rate three times.

It is also the first time the central bank has cut its key rate between policy meetings since the 2008 financial crisis and the largest rate cut since then.

On Monday, the Dow surged 5% and had its biggest-ever point gain in anticipation of moves by the Fed and other central banks to support the global economy following the worst week for stocks since 2008.

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