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* Indexes slump: Dow -2.94%, S&P 500 -2.81%, Nasdaq -2.99%
* Fed cuts rates by half percentage point
* Concerns about virus impact dominate
(Updates with close)
By Noel Randewich
March 3 (Reuters) - Wall Street tumbled in a volatile
session on Tuesday after the U.S. Federal Reserve surprised
investors with a half percentage-point cut in interest rates,
amplifying fears about the magnitude of the coronavirus' impact
on the economy.
All three major U.S. stock market indexes closed nearly 3%
lower after the Fed's first emergency rate cut since the 2008
financial crisis.
The rate reduction underscored the U.S. central bank's
concern about the new coronavirus, which has spread around the
world after emerging late last year in China. It came two weeks
ahead of a scheduled policy meeting, where traders had fully
priced in a 50-basis-point cut.
Stocks had initially jumped more than 1%, but then dropped
as traders worried whether pumping more money into financial
markets would address the central problem - a drop in business
activity as workers and consumers stay home. "The rate cut underscores the magnitude of the problem that
the global economy is facing," said Peter Kenny, founder of
Kenny's Commentary LLC and Strategic Board Solutions LLC in New
York.
"Normally, markets would welcome a rate cut, and they were
hoping for it. Now that we've got it, the question is, what's
next?"
The 10-year Treasury yield US10YT=RR fell below 1% for the
first time ever as nervous investors moved money out of the
stock market. The S&P financials index .SPSY tumbled 3.7%, reflecting
banks' difficulty in making profits in low-interest rate
environments.
Wall Street on Friday had its biggest weekly decline in more
than a decade as growing cases of the flu-like virus outside
China fanned fears of a global recession.
Earlier on Tuesday, Group of Seven finance ministers and
central bank governors pledged appropriate actions to support
their economies. "There is a real fear that things are going to get worse and
there is no point in waiting for these fears to be realized,"
Jim Bianco, president of Bianco Research in Chicago, said of the
Fed's rate cut. "You can always undo the rate cut if it fails to
materialize."
The Dow Jones Industrial Average .DJI dropped 2.94% to end
at 25,917.41 points, while the S&P 500 .SPX lost 2.81% to
finish at 3,003.37.
The Nasdaq Composite .IXIC descended 2.99% to 8,684.09.
Like other recent sessions, volume was heavy on U.S.
exchanges, with 14.7 billion shares changing hands compared with
a 9.8 billion-share average for the last 20 days.
All of the 11 major S&P sectors fell, with the information
technology index .SPLRCT slumping 3.8%. Apple AAPL.O and
Microsoft MSFT.O fell 3.2% and 4.8%, respectively.
Tuesday's sell-off left the S&P 500 down about 11% from its
record high close on Feb 19.
Healthcare equipment maker Thermo Fisher Scientific TMO.N ,
rose 1.8% after it launched an $11.6 billion bid for German
genetic testing company Qiagen QIA.DE . Protective mask maker Alpha Pro Tech APT.A jumped nearly
Declining issues outnumbered advancing ones on the NYSE by a
1.67-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored decliners.
The S&P 500 posted two new 52-week highs and 32 new lows;
the Nasdaq Composite recorded 19 new highs and 185 new lows.