Wall Street’s concerns about the novel coronavirus are continuing on Monday, and the three major U.S. benchmarks are set to decline substantially at the opening bell despite emergency measures taken by the Federal Reserve on Sunday.
Dow Jones Industrial Average futures fell by around 5%, the largest drop futures are allowed to take in after-hours trading. The Dow is likely to take a hit of about 1,000 points at open. The S&P 500 also dropped by 5% to reach the “limit down” band, and the Nasdaq Composite too was at its low-end limit.
The Fed slashed interest rates to near-zero on Sunday afternoon, setting a target benchmark of 0% to 0.25%, the first move of this kind since the Great Recession in 2008. The Fed additionally launched a $700 billion quantitative easing program. It will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion.
Fears of the virus in the U.S. expanded last week after the World Health Organization declared the novel coronavirus, which causes the disease COVID-19, a pandemic. This weekend, a slew of retailers announced that their full fleets of U.S. stores would be closed temporarily. These include Nike, Allbirds, Under Armour and Steve Madden, all of which promised to compensate workers while doors remain shut.
Major events have been postponed or canceled, with seasons for the NBA, NHL and MLB suspended along with festivals such as Coachella and SXSW. The Centers for Disease Control and Prevention has advised that public gatherings be kept to 50 people or fewer. And the mayors of New York and Los Angeles have announced that all bars and restaurants will be open only for take out and delivery orders over a two-week period as authorities try to stop the spread of the virus.
According to the latest data from Johns Hopkins University, there have been about 169,000 known cases of the virus globally, which has killed over 6,500 people. In the United States, nearly 3,800 confirmed cases of the coronavirus have been recorded and more than 60 have died.