(For a live blog on the U.S. stock market, click LIVE/ or
type LIVE/ in a news window)
* Indexes drop: Dow -3.35%, S&P 500 -3.25%, Nasdaq -3.54%
* Fed cuts rates by half percentage point
* Concerns about virus impact still dominate
(Updates with afternoon trade)
By Noel Randewich
March 3 (Reuters) - Wall Street tumbled in a volatile
session on Tuesday after the 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 dropped more than
3% after the Fed's first emergency rate cut since the 2008
financial crisis.
The rate reduction underscored the Fed's concern about the
coronavirus that 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."
At 2:28 p.m. ET, the Dow Jones Industrial Average .DJI
slumped 3.35% at 25,810.05 points, while the S&P 500 .SPX lost
3.25% to 2,989.76.
The Nasdaq Composite .IXIC dropped 3.54% to 8,635.25.
Ten of the 11 major S&P sectors fell, with the information
technology index .SPLRCT slumping 4.6%. Apple AAPL.O and
Microsoft MSFT.O fell 5% and 4%, respectively.
Healthcare equipment maker Thermo Fisher Scientific TMO.N ,
rose 1.3% after it launched a $11.6 billion bid for German
genetic testing company Qiagen QIA.DE .
Protective mask maker Alpha Pro Tech APT.A jumped 19%.
Declining issues outnumbered advancing ones on the NYSE by a
2.08-to-1 ratio; on Nasdaq, a 3.10-to-1 ratio favored decliners.
The S&P 500 posted two new 52-week highs and 30 new lows;
the Nasdaq Composite recorded 17 new highs and 154 new lows.