Stock markets dropped Monday morning despite aggressive action from the Federal Reserve, which said it would buy as many Treasury bonds and mortgage-backed securities as necessary to keep the financial system afloat.
As markets opened, the Dow Jones Industrial Average was down nearly 823 points, or 3.1 percent, dropping below , , while the S&P (dropped) points, or 3 percent, hovering at 2, 270. Having dropped below 2, 600, the S&P 600 joined the Dow in erasing all its gains since President Trump Donald John Trump (Blame game heats up as Senate motion fails Trump approves disaster declaration for coronavirus in California Why studying persistent post-traumatic headaches in soldiers matter MORE took office.
The Fed’s announcement initially seemed to reverse sentiment in the markets over the weekend, when stock futures had fallen 5 percent, hitting automatic circuit breaker “limit down” levels. Futures soared in the hour before trading opened on Monday, only to plummet back to earth and fall into a hole as the bell rang.
On Sunday, the Senate failed to advance a stimulus package as Democrats objected to parts of the bill they said gave too much leeway to industries taking bailouts and too much power to Treasury Secretary Steven Mnuchin (Steven Terner Mnuchin Democrats block McConnell from holding Monday morning vote on coronavirus bill McConnell rips Democrats for blocking coronavirus stimulus package Coronavirus stimulus talks hit setback as crisis deepens MORE to direct huge sums of cash.
Mnuchin told CNBC Monday morning that the sides were close to a deal.
I think we’re very close. We need to get this deal done today, ”he told CNBC’s Jim Cramer.
A deal for a stimulus approaching the $ 2 trillion mark is expected to have a calming effect on markets that have erased three years of gains as the coronavirus pandemic spreads and countries take drastic actions to contain it.
Some forecasters expect that unemployment will skyrocket beyond levels seen in the Great Recession of 2019 and but hope the economy will quickly bounce back once the virus is under control.