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* Indexes down: Dow 1.51%, S&P 1.28%, Nasdaq 1.20%
* Fed cuts rates by half percentage point
* Concerns about virus impact still dominate
(Adds details, updates prices)
By Medha Singh
March 3 (Reuters) - U.S. stock markets fell sharply on
Tuesday on worries that even a half percentage-point cut in
interest rates might not be enough to stave off the economic
impact of the coronavirus outbreak and halt the worst sell-off
in more than a decade.
It was the Federal Reserve's first emergency rate cut since
the 2008 financial crisis, underscoring how grave the central
bank views the fast-evolving situation. Stocks initially jumped more than 1% on the news, but gains
soon petered out as analysts and traders worried whether pumping
more money into financial markets would address the central
problem - a cut in business activity as workers and consumers
stay home.
"The market reaction now is negative because the Fed sent
the wrong message to the market," said Peter Cardillo, chief
market economist at Spartan Capital Securities in New York.
"All of a sudden the Fed is really worried about the economy
and this is the reason why we are having this volatility."
Earlier in the day, Fed Chair Jerome Powell took part in a
Group of Seven conference call, which pledged appropriate
actions to support the economies. The U.S. central bank cut rates three times in 2019 and has
since held fire amid signs of improving growth after a Phase-1
trade deal between the United States and China.
Bank stocks .SPXBK , which tend to outperform when
interest rates are higher, dropped 3.4%, while the broader
financials .SPSY sector fell 2.6%. Five of the 11 major S&P
sectors were trading higher.
"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."
At 11:47 a.m. ET, the Dow Jones Industrial Average .DJI
was down 403.67 points, or 1.51%, at 26,299.65, the S&P 500
.SPX was down 39.53 points, or 1.28%, at 3,050.70. The Nasdaq
Composite .IXIC was down 107.02 points, or 1.20%, at 8,845.14.
Healthcare equipment maker Thermo Fisher Scientific TMO.N ,
rose 3% after it launched a $11.6 billion bid for German genetic
testing company Qiagen QIA.DE .
Electric-car maker Tesla TSLA.O rose 3% after brokerage JMP
Securities upgraded the stock to "market perform".