US open: Trading halted as stocks hit 'limit down' again
Wall Street trading was halted on Monday after stocks hit "limit down" despite the Federal Reserve launching an extensive monetary stimulus campaign at the weekend aimed at curbing slower economic growth amid the fallout from the COVID-19 outbreak.
As of 1545 GMT, the Dow Jones Industrial Average was down 7.74% at 21,391.32, while the S&P 500 was 7.07% lower at 2,519.44 and the Nasdaq Composite started out the session 6.88% weaker at 7,333.32.
The Dow opened 1,794.30 points lower on Monday, giving back most of Friday's gains and putting major indices more than 26% below the record highs set in February.
The SPY ETF, which tracks the S&P 500, plummeted 9% in pre-market trading, triggering a "circuit breaker" at the open which saw trading halted for 15 minutes. Dow Jones and Nasdaq ETFs were also down 8%.
The Federal Reserve cut interest rates to between 0.00% and 0.25% on Sunday as it announced the launch of a $700bn stimulus programme to help counter the impact of the coronavirus pandemic.
The Fed said in a statement: "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States.
"The effects of the coronavirus will weigh on economic activity in the near-term and pose risks to the economic outlook.
"The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goal."
The central bank also said it was renewing its bond-buying campaign. It will buy at least $500bn in Treasury bonds and at least $200bn in mortgage-backed securities to lower rates for mortgages and other consumer and business loans.
However, news that US COVID-19 cases had grown to 3,774, with 69 deaths, were weighing on sentiment.
Oanda's Craig Erlam said: "As ever, officials have the extremely difficult job of striking the right balance in response to the coronavirus, between providing sufficient support and not creating mass hysteria. Some may suggest that the Fed cleared ventured too far towards the latter but I think they've probably done what's necessary and anyone that thought the situation wasn't that bad to begin with was kidding themselves.
"These markets are wild and today is merely a symptom of that. As was Friday, by the way. Near 10% gains on Wall Street in this environment is utterly ridiculous. The simple fact of the matter is that we're still in the getting worse phase and not that close to turning a corner so we better get used to these markets and I, for one, am happy central banks are acting so drastically."
On the election front, Democratic candidate Joe Biden overtook Donald Trump as the favourite to win the US Presidential Election.
Paddy Power upped Biden's position and listed him as their even-money favourite to win the race, with Trump now out to 11/10 to secure another term in office.
After his victories in the primaries against his main rival Bernie Sanders he is now 1/25 with a 96% of becoming the Democratic nominee to go head to head with Trump in November.
In macro news, manufacturing activity in the New York jurisdiction deteriorated sharply in March, posting its worst one-month drop on record to the lowest level since 2009, according to data released on Monday.
The New York Fed’s Empire State index slid 34 points to -21.5, missing expectations for a reading of 3.0
According to the survey, 20% of respondents reported that conditions had improved over the month, while 42% reported a worsening.
While no major corporate earnings were scheduled for release on Monday, Apple shares were down more than 11% after announcing that it would close all of its retail stores outside of Greater China until 27 March.