Wall Street set to crash again after Fed slashes rates

By Supriya Kurane

(Reuters) – Wall Street looked set to crater on Monday as fears of a coronavirus-driven recession intensified following a second emergency interest rate cut in a fortnight by the Federal Reserve.

S&P 500 futures fell 4.77% to hit a daily down limit in early trading, and S&P 500 ETFs (P:) plunged 9%, suggesting the benchmark index would set off a 15-minute cutout at 7% put in place to prevent another 1987 “Black Monday”-style crash.

Central banks in the United States, Japan, Australia and New Zealand announced sweeping monetary easing in a co-ordinated effort not seen since the 2008 financial crisis, but failed to shore up global investor sentiment.

The extent of the action, taken ahead of the Fed’s regularly scheduled meeting set for Tuesday and Wednesday, spooked investors following Wall Street’s attempt at a rebound on Friday as President Donald Trump declared a national emergency and earmarked $50 billion in fiscal aid.

“We’re facing the loss of credibility of the central bank from a market perspective,” said Michael O’Rourke, chief market strategist, Jonestrading, Stamford, Connecticut.

“When the investor community loses faith in the Fed, that’s when the market gets very dangerous.”

At 5:36 a.m. ET, were down 1,041 points, or 4.53%. S&P 500 e-minis were down 128.5 points, or 4.77% and were down 359.75 points, or 4.54%.

S&P 500 ETFs were down 9.1% at their lowest since January 2019.

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