Federal Reserve makes emergency interest rate cut, stocks jump in response

U.S. stocks jumped Tuesday after the Federal Reserve made an emergency rate cut to help shield the economy from the impact from the virus outbreak. The Dow Jones Industrial Average rose 172 points, or 0.6% as of 10:10 a.m. Eastern time. It had been down as much as 356 points shortly before the announcement. The Dow surged 5% Monday in anticipation of moves by the Fed and other central banks to support the global economy following the worst week for stocks since the financial crisis of 2008. The Fed cut short-term rates by half a percentage point, the biggest cut in more than a decade.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below:

U.S. stocks stumbled in early trading Tuesday after the world’s largest economies pledged action to try and offset the impact from the coronavirus outbreak but gave no specific plan.

Traders had been keenly awaiting the outcome of a conference call of central bankers and finance ministers from the Group of Seven, which includes the most powerful developed nations, with some hoping for a wide-ranging package of economic support.

Instead, the group reaffirmed their commitment to use “all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks.”

The Dow Jones Industrial Average fell 352 points, or 1.3%, to 26,358. The Dow surged 5% a day earlier as traders hoped for stimulus to counter the negative economic effects of the virus outbreak. The S&P 500 fell 1.1% and the Nasdaq fell 1.1%.

Technology companies and banks led the losses. Chipmakers were among some of the biggest losers.

Markets in Europe and Asia climbed, though Japan’s Nikkei 225 fell 1.2%.

Bond prices fell and pushed yields higher. The yield on the 10-year Treasury rose to 1.13% from 1.08% late Monday.

Utilities and real estate companies held up better than most of the market.

Markets in Europe and Asia climbed, though Japan’s Nikkei 225 fell 1.2%.

The G-7, which includes the U.S., Japan and Germany, among others, made its statement after weeks of warnings from companies that the virus will hit their finances. Economic groups have also warned of worsening forecasts for global economic growth.

Payments processor Visa is among the latest companies warning investors. It expects first-quarter revenue to suffer because of the damage to international travel. Chipmaker Microchip Technology withdrew its profit forecast for the year because of the uncertainty surrounding the virus’ impact.

Investors have been increasingly looking to governments and their central banks for help in offsetting the economic damage from the virus. It has shutdown production and stymied travel throughout the globe since hitting China in December and spreading.

Worldwide, more than 90,000 people have been sickened and 3,100 have died. The number of countries hit by the virus has reached at least 70, with Ukraine and Morocco reporting their first cases.

U.S. markets have been hit hard by fear over the virus’ impact. Stocks surged on Monday over hopes that central banks will help shield the global economy. That followed a broad sell-off last week that erased gains for 2020 and sent indexes into what market watchers call a “correction,” or a fall of 10% or more from a peak.

Several companies reported earnings as the latest round of quarterly reports nears its end. Kohl’s edged higher after it raised its dividend following a surprisingly good fourth quarter. Auto parts retailer AutoZone slipped after reporting a surprising drop for a key sales measure.

Medical equipment maker Thermofisher Scientific rose 3.3% after saying it will spend more $10 billion to by Qiagen.