Stocks fall on Wall Street as virus relief bill stalls

Coronavirus

NEW YORK (AP) — Stocks around the world swung lower Monday, even after the Federal Reserve announced a tidal wave of support for lending markets, going way beyond the “bazooka” it had already unloaded.

The scale of the Fed’s moves impressed investors, but stocks sttill fell in the first few minutes of trading as worries continue to rise about the economic pain being caused by the coronavirus outbreak.

Central banks are doing what they can to support the economy as more states and communities close down, but investors want to see the U.S. government do its part as well. Congress was debating a nearly $2 trillion rescue package for the economy over the weekend, but top White House officials and congressional leaders are struggling to finalize it.

The S&P 500 was down 1.8%, as of 9:50 a.m. Eastern time. The Dow Jones Industrial Average fell 271 points, or 1.4% to 18,904 and the Nasdaq was down 0.4%.

U.S. stock futures and European markets got a boost early in the morning, before U.S. began following the Fed’s announcement. But the gains quickly diminished.

In a series of sweeping steps, the Fed said it will set up three new lending facilities that will provide up to $300 billion by purchasing corporate bonds, buying a wider range of municipal bonds, and purchasing asset-backed securities. It also says it will buy an unlimited amount of Treasury bonds and mortgage-backed securities in an effort hold down interest rates and ensure those markets function smoothly.

Lockdowns and closures intended to halt the spread of the new coronavirus expanded over the weekend to include many cities around the world and the number of people infected surged past 336,000.

A sharp surge in cases and in deaths across the region, especially in Southeast Asia, have also raised the level of alarm.

Ultimately, investors say they need to see the number of new infections stop accelerating for the market to end its prolonged, bouncing tumble.

Investors have continued to seek safety in U.S. government bonds, driving their yields broadly lower. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, slid to 0.80% Monday from 0.94% late Friday.

At nearly $2 trillion, the U.S. rescue package is the biggest effort yet to aid households and shore up the U.S. economy, the world’s biggest.

But markets have continued to fall as scores of other governments and many central banks have acted as they try to stave off or at least alleviate the impact of a recession.

Many investors are waiting for markets to fall further before plunging back in, said Naeem Aslam of Avatrade.

Should the market drop by another 10% to 20%, the overall decline from recent peaks would be over 50%, and “that would be a massive buy signal,” Aslam said.

More than 14,400 people have died of the coronavirus worldwide, while nearly 100,000 people have recovered.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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