- Stocks continued to rise from their lows in late February on Tuesday after the Federal Reserve ordered an emergency rate cut to reduce the risk of coronaviruses.
- The 50 basis point adjustment is the first cut between Federal Open Market Committee meetings since the 2008 financial crisis.
- All major US indices rose after the announcement before some gains were cut.
- Equities remain well below their record highs as uncertainty about coronaviruses continues to hamper valuation of risk assets. The outbreak has so far killed more than 3,000 people and infected more than 90,000.
- You can find more stories on the Business Insider homepage.
Shares continued to recover after the Federal Reserve in March Key interest rate cut by half a percentage point on Tuesday and gave new economic impetus in the face of increasing coronavirus risks.
All major US stock indices rose as investors welcomed cautious policies. The central bank cut the key interest rate to 1% to 1.25%, thereby achieving the cut between meetings of the Federal Open Market Committee. The cut is the first emergency adjustment since the 2008 financial crisis.
The S&P 500 even rose 1.4% after the announcement. The Dow Jones Industrial Average even rose by 380 points or around 1.4%.
Here were the main US indices on Tuesday at 10:45 a.m. ET:
S&P 500:: 3,109.97, up 0.6%
Dow Jones industry average:: 26,733.60, plus 0.1% (100 points)
Nasdaq 100:: 8,940.34, plus 0.7 %%
The markets had already priced in a 100% chance of a 25 basis point cut in March, but Tuesday's announcement arrived two weeks before the planned FOMC meeting. The Fed signaled that additional stimulus is in sight as it keeps an eye on the global outbreak.
"The fundamentals of the US economy are still strong. However, the corona virus poses an evolving economic risk," the central bank said in one Explanation, "The Committee is closely monitoring developments and their impact on the economic outlook and will use its tools and act to support the economy where appropriate."
The central bank's action is based on market experience their worst week since the financial crisis Close February. Stocks replenished as new coronavirus outbreaks in Iran, Italy, and South Korea increased the risk of the outbreak becoming a pandemic. The stocks entered the correction area on Thursday and continued to slide in the subsequent trading session as investors saw little hope of struck markets.
Although the emergency cut has dispelled some fears that the Fed would act too late, some experts are skeptical that a lower interest rate will protect against an economic downturn. Coronavirus is a burden on the global offer as countries shut down factories to curb infection. Even if central banks boost consumer spending, limited inventory could pose a problem for economies, said Seema Shah, chief investment strategist at Principal Global Investors, on Tuesday.
"Markets will quickly see through the central bank's commitments and realize that the only relevant measure is the pace of increasing cases outside of China and government action to curb the spread of the virus," Shah said in an emailed statement ,
The next meeting of the FOMC will take place from March 17th to 18th. Fed chairman Jerome Powell is expected to hold a press conference on Tuesday at 11:00 a.m.
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