Markets Tumble as Big Fed Move Fails to Quell Virus Fears

Markets reeled on Monday, with stocks on Wall Street and the price of Brent crude tumbling more than 10%, as the Federal Reserve’s second emergency rate cut in as many weeks failed to calm fears of a coronavirus-induced recession.

Volatility gauges known as fear indexes spiked, with the Euro STOXX 50 in Europe surging almost 28% to an all-time high and the CBOE Market Volatility index soaring more than 30% as stocks plunged further into bear territory.

Even traditional safe havens cratered as fearful investors said that cash is king.

Platinum dived nearly 27% to its weakest level since 2002, while gold fell more than 5% as investors unloaded precious metals in exchange for cash as not enough buyers sparked illiquidity, especially in the U.S. Treasury market.

The S&P 500 plunged 8% shortly after the open to trigger an automatic 15-minute halt in trading on the three main U.S. stock indexes. The halt was the third emergency pause on Wall Street in six days, and U.S. stocks resumed their decline after trading resumed.

Investors worried that the Fed action, joined by central banks in Japan, Australia, New Zealand and elsewhere, may be insufficient for companies facing a sharp slide in demand. The moves were reminiscent of the sweeping steps taken more than a decade ago to staunch a meltdown of the global financial system.

Lower rates and increased asset purchases by the Fed will help ease tight credit markets, but the U.S. government needs to do more to address the impact of the coronavirus, said David Joy, chief market strategist at Ameriprise Financial in Boston.

“The Fed did what it could; I’m not so quick to blame the Fed,” Joy said. “Investors are looking around hoping, praying, that there will be a big fiscal package yet to come from Washington – but getting nervous that it might not.”

Rate-sensitive U.S. financial stocks plunged -12.8%, leading declines among the major S&P sectors. Energy stocks tracked a 10% slump in oil prices, while technology stocks also slid -11.9%. Apple Inc, Amazon.com Inc and Microsoft Corp together lost nearly $300 billion in market value.

MSCI’s gauge of stocks across the globe shed 8.41% and the pan-European STOXX 600 index lost 4.86% as stock markets pared initial deeper losses in Europe. Marketsin France and Spain led the decline as the two countries joined Italy in enforcing a national lockdown.