(Updates to afternoon)
* Fed to lend against student loans, repurchase Treasuries
* More states under lockdown
* Goldman Sachs sees 24% plunge in Q2 U.S. real GDP
* Indexes off: Dow -3.03%, S&P 500 -2.88%, Nasdaq -0.76%
By Noel Randewich
March 23 (Reuters) - Wall Street's slide deepened on Monday
as the rapidly spreading coronavirus forced more U.S. states
into lockdown, overshadowing unprecedented moves by the U.S.
Federal Reserve to shore up credit across the economy.
After recently cutting interest rates to near zero, the Fed
will now lend against student loans and credit card loans, as
well as back the purchase of corporate bonds and make direct
loans to companies. The unprecedented steps briefly lifted U.S. stock index
futures before Monday's trading session began, but the mounting
death toll from COVID-19 and a tide of lockdowns quickly sent
the main indexes into the red, putting the S&P 500 .SPX on
pace for its worst month since World War Two.
"What the Fed did is important because it does help in the
credit markets. But it's not enough from an equity market
perspective," said Willie Delwiche, investment strategist at
Robert W. Baird in Milwaukee.
"What we now need is leadership out of Congress to pass some
sort of stimulus bill, because what the Fed's doing is relieving
some problems, but it doesn't do enough to solve to solve what's
out there."
Investors had hoped the U.S. Senate would clear a $1
trillion-plus coronavirus stimulus package over the weekend, but
Democrats and Republicans were still scrambling to come to an
agreement. Maryland, Ohio, Louisiana and Delaware joined New York and
California in asking people to stay home, foreshadowing a near
halt in economic activity and more pain for U.S. equities and
prompting several analysts to slash their growth forecasts.
Goldman Sachs expects an outright contraction in global real
GDP in 2020 on the back of a 24% plunge in U.S. real GDP in the
second quarter: two-and-a-half times as large as the previous
post-war record. The Fed's stimulus measures failed to reassure investors
jolted by a $9 trillion wipeout in the benchmark S&P 500's value
since a record high hit last month. A rush for safe-haven assets
like government bonds caused U.S. Treasury yields to fall on
Monday. The S&P 500 was on track to close down 34% from its February
record high, its lowest level since fears of the coronavirus
swept across Wall Street.
"What we really need to turn things around is a sense of
closure - not on the virus, but on the response to the virus,"
said Stephen Massocca, Senior Vice President at Wedbush
Securities in San Francisco. "Once the market sees that, I think
the market will rebound considerably."
At 2:32 p.m. ET, the Dow Jones Industrial Average .DJI was
down 3.03% at 18,592.71 points, while the S&P 500 .SPX had
tumbled 2.88% to 2,238.61.
The Nasdaq Composite .IXIC dropped 0.76% to 6,827.12, its
overall decline cushioned by a 2.2% rise in Amazon.com AMZN.O .
The S&P energy index .SPNY slumped 6.3%, the most among
the 11 major sectors, tracking a plunge in oil prices. O/R
The S&P consumer discretionary index .SPLRCD rose 0.3%,
the only sector index in positive territory.
Leading the Dow, Boeing BA.N surged 11.6% after Goldman
Sachs upgraded its rating on the planemaker to "buy".
Declining issues outnumbered advancing ones on the NYSE by a
3.10-to-1 ratio; on Nasdaq, a 1.75-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 208 new lows;
the Nasdaq Composite recorded 2 new highs and 483 new lows.