U.S. equity markets tumbled and the 10-year Treasury yield hit a record low after Federal Reserve Chairman Jerome Powell explained an emergency rate cut designed to cushion the economy from any coronavirus-related fallout.
The rate cut, which came hours after G7 leaders pledged to use “all appropriate policy tools” to safeguard against downside risks caused by the outbreak, lowered the central bank’s key interest rate by 50 basis points to a range of 1 percent to 1.25 percent. The benchmark 10-year yield fell by 10 basis points to a new low of 0.984 percent.
“My colleagues and I took this action to help the U.S. economy keep strong,” Powell said at a news conference. “The virus and the measures being taken to contain it will surely weigh on economic activity both here and abroad for some time.”
The coronavirus has sickened at least 88,948 people worldwide and killed 3,043, according to the latest figures from the World Health Organization.
The Dow Jones Industrial Average traded Tuesday in a more than 700-point range, swinging between gains and losses, as investors digested the Fed’s move. The early swings come a day after all three of the major averages rallied from a weekly selloff to post their biggest single-day point gains on record.
As traders keep an eye on any coronavirus-related developments, they will also be monitoring the results of Super Tuesday primaries that will award 1,357 delegates to the Democratic Party’s presidential contenders.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SP500 | S&P 500 | 3006.05 | -84.18 | -2.72% |
| I:DJI | DOW JONES AVERAGES | 25770.45 | -932.87 | -3.49% |
| I:COMP | NASDAQ COMPOSITE INDEX | 8692.870314 | -259.29 | -2.90% |
Looking at stocks, Delta Air Lines gained after Warren Buffett’s Berkshire Hathaway raised its stake by about 1 million shares. The stock had lost as much as 20 percent during the market’s recent seven-day selloff. Competitors American Airlines and United Airlines were unable to maintain early gains on the news.
Electric-car manufacturer Tesla soared after a JMP analyst upgraded its shares to “outperform” and set a $1,060 price target, citing sustainable growth for the next four to five years.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DAL | DELTA AIR LINES INC. | 46.66 | -0.50 | -1.06% |
| AAL | AMERICAN AIRLINES GROUP INC. | 18.07 | -0.80 | -4.22% |
| UAL | UNITED AIRLINES HLDG. | 58.75 | -2.51 | -4.10% |
| TSLA | TESLA INC. | 730.15 | -13.47 | -1.81% |
On the earnings front, Target reported mixed fourth-quarter results and issued a disappointing full-year profit forecast.
Clothing retailer Kohl’s reported a stronger-than-expected quarterly profit, however, and raised its dividend. The company’s 2020 earnings forecast also exceeded estimates.
Meanwhile, cannabis producer Tilray was under pressure after reporting a bigger fourth-quarter loss than estimated.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TGT | TARGET CORP. | 104.19 | -4.87 | -4.47% |
| KSS | KOHL’S CORP. | 37.15 | -1.29 | -3.36% |
| TLRY | TILRAY INC | 13.08 | -2.27 | -14.78% |
Commodities rallied as West Texas Intermediate crude oil spiked 1.5 percent to $47.45 a barrel, and gold gained 3.2 percent to $1,645.70 an ounce.
In Europe, markets were higher across the board, with Germany’s DAX gaining 2.1 percent while Britain’s FTSE and France’s CAC were both higher by 1.8 percent.
Overnight, Asian markets ended mixed as China’s Shanghai Composite added 0.7 percent and Japan’s Nikkei fell 1.2 percent. Hong Kong’s Hang Seng was little changed.
