US open: Stocks record early gains as Fed makes surprise rate cut

Wall Street trading began on a positive note on Tuesday as investors eyed a statement from the Group of Seven nations on how they plan to counter the impact of the Wuhan coronavirus outbreak and digested news that the Fed had cut its benchmark rate by half a point in a rare inter-meeting move.

As of 1540 GMT, the Dow Jones Industrial Average was up 0.32% at 26,789.52, while the S&P 500 was 0.51% firmer at 3,106.02 and the Nasdaq Composite came out of the gate 0.45% stronger at 8,992.39.

The Dow Jones opened 86.20 points higher on Tuesday after seeing out the previous session nearly 1,300 points firmer as the blue-chip index attempted to reclaim some of its recent losses with its biggest percentage gain since March 2009, amid expectations that the Federal Reserve will again cut rates.

Investors were digesting the outcome of a G7 conference call on the coronavirus, during which finance ministers and central bankers vowed to "use all appropriate policy tools" to help combat the economic impact of the outbreak.

"Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase," read the statement.

"G7 central banks will continue to fulfil their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system."

Also in focus, the US Federal Reserve cut interest rates by 50 basis points as it looked to counter the economic impact of the coronavirus outbreak.

In an unscheduled announcement, the US central bank cut its benchmark rate to between 1% and 1.25% from between 1.5% and 1.75%.

The Fed said in a statement: "The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate.

"The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy."

Following the news, the 10-year Treasury note yield rose 3.8 basis points to 1.126%, while the 2-year note rate fell 1.6 basis points to 0.810%.

No major data relases were scheduled for Tuesday.