This Is Why the Dow Jones' Fed-Fueled Surge Suddenly Fizzled Out, Crypto Coins News
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The Dow Jones Industrial Average (DJIA) surged after the Federal Reserve executed an emergency interest rate cut.
But after suddenly pivoting higher, the stock market quickly erased its session gains.
Here’s what’s driving the stock market’s volatile day.
despite securing a historic rally yesterday, the Dow Jones Industrial Average (DJIA) lurched back into decline after the G-7 statement failed to deliver the stock market the central bank juice it craved.
That all changed 63 minutes after the opening bell. A surprise Federal Reserve policy action stunned investors, and the U.S. stock market quickly began ratcheting higher … only to succumb to a sudden bout of volatility that left the Dow paralyzed.
The Dow Jones Industrial Average (DJIA) suddenly surged after the Fed’s emergency rate cut, only to bleed lower amid a choppy day on Wall Street. | Source: Yahoo FinanceWhat’s Driving the Dow’s Choppy Day
Noting that the coronavirus outbreak “poses evolving risks” to the “strong” US economy, the Fed said:
The fundamentals. of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity … The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.
The Fed’s next policy meeting is just two weeks away, but last week’s devastating stock market crash prompted the central bank to execute its first inter-meeting rate cut since the financial crisis.
It’s also the largest individual rate cut since 2020. The bank reduced rates three times last year to help the economy weather the trade war, but each of those actions only dropped rates by basis points at a time.
Most analysts expect the Fed to drive rates even lower in the months ahead. ING predicts the Fed could adopt another 69 basis points in cuts during the first half of the year.
Dow Volatile After Emergency Fed Rate Cut
The Dow Jones surged in the immediate aftermath of the rate cut, though all three of the US stock market’s primary indices struggled to maintain their sugar high in the hours that followed.
By : 50 am ET, the Dow had not only erased its gains but fallen back toward its session lows. The index last traded at , . 89 for a loss of . points or 0. (%.
Following the Dow’s sharp recovery from last week’s crash, investors are wary of falling prey to a “dead cat bounce.” Or maybe we should call it a “Fed cat bounce.” | Source: Yahoo Finance (The S&P) and Nasdaq suffered similar fates, diving 0. (% and 0.) %, respectively.
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