BREAKING NEWS: Stocks Tumble After Fed Cuts Interest Rates By 50 Basis Points In Emergency Move Due To Coronavirus Uncertainty
On Friday, February 29th, 2020, the market recouped most of its loss after Fed Chairman Jerome Powell announced the Federal Reserve Board will be cutting interest rates shortly.
- The Dow was down over 1,000 points but ended up closing down 300 points due to the Fed Chairman’s announcement
- On Monday, March 2nd, the Dow Jones Industrial Average skyrocketed 1,290 points on hopes the Fed cutting interest rates by 50 basis points
- This morning, the Central Bank announced a 50 basis point interest rate cut but the Dow Jones and other equity market indices went the other way
- The Dow plummeted more than 3,500 points last week making it the largest market selloff since the 2008 financial crisis
- The market collapse last week makes the financial markets in correction territory
- A market correction happens when the stock market drops 10% or more
- All equity markets are tanking
- Stocks tumble after Fed cuts interest rates by 50 basis points
- What is going on here?
- Wasn’t the markets expecting the interest cuts by the Feds?
- Why are the markets going in a different direction?
- Was was the interest rate cuts turning into a major disaster for the markets?
- The stock market collapse are plummeting mortgage rates which is good news for homebuyers and homeowners applying for a mortgage
- The 2020 Housing Market Forecast still remain strong, if not stronger due to mortgage rates tanking
- Investors are nervous the market will enter a Bear Market
- A Bear Market is when the market makes a 20% correction
In this article, we will discuss and cover the breaking news of Stocks Tumble After Fed Cuts Interest Rates By 50 Basis Points.
Stocks Tumble Right After The Emergency Interest Cut News Release By The FOMC
On Monday, the Dow Jones Industrial Average dropped 785.91.
- Throughout the day, the market was very volatile
- The Dow opened lower at the start of today’s trading day
- However, at 10 AM CDT, the Feds announced the interest rate cut of 50 basis points
- Then the Dow Jones went into positive territory with a 300 plus point gain
- Then Federal Reserve Board Chairman Jerome Powell spoke at 11 AM EST
- As the Fed Chairman was talking, the markets started taking a downturn
- The Dow dropped as low as 1,000 today, closing at 785.91
- So what went wrong?
- Many market experts offering different opinions
- Many say Chairman Powell announced the Fed cut too soon due to panicking
Just yesterday, the Dow soared 1,290 on hopes the Fed will be cutting rates. So the Feds cut interest rates and the markets plummet.
FOMC Announcement Of Emergency Interest Rate Cuts Trigger Stocks Tumble
So the bottom line is the Feds are in a state of panic and want to trigger the market and avoid an economic collapse.
Dow Stocks Tumble As Well As All Other Equity Market Indices After The Fed Cut Rates
Historic Data Of Interest Rate Cuts By The Feds
The coronavirus scare is affecting the financial market engines due to the uncertainty. There is no cure for this deadly virus. Researchers are working on a cure and vaccine but at best, it will take a year or more. In the meantime, the world and the U.S. are in a state of panic. More and more cases of the virus are being reported. Washington State reported the first death of the coronavirus over the weekend. To date, there are 9 deaths reported in the state of Washington. More cases of the virus are being reported. New York, Rhode Island, and Illinois all reported new cases of the coronavirus in the past few days.
Here is the historic data of the interest rate cuts by the FOMC:
- Oct. 1998 (25bp)
- Jan. 2001 (50bp)
- Apr. 2001 (50bp)
- Sep. 2001 (50bp)
- Aug. 2007 (50bp discount rate cut)
- Jan. 2008 (75bp)
- Oct. 2008 (50bp coordinated cut)
- Mar. 2020 (50bp)
Experts are expecting the Feds to cut interest rates this year. President Trump said he was not at all happy with the 50 basis point emergency interest rate cut today. The President said interest rates should be lower in order to compete with others. The President has talked about negative interest rates like other countries have implemented. All of this market chaos and uncertainty has a positive impact on homebuyers and homeowners needing to refinance. In general, when stocks tumble, mortgage rates plummet. Mortgage rates are trading at a historic low and many experts are expecting them to go lower. The 2020 housing market forecast was strong. However, with the uncertainty of the financial markets and the Feds lowering interest rates, expect mortgage rates to go substantially lower. Gustan Cho Associates Mortgage News will keep our viewers updated as we get more developments about the financial and mortgage markets and the impact the coronavirus has on the housing markets.
March 3, 2020 - 4 min read