Ahead of what’s expected to be another busy week on Wall Street, U.S. futures are limit down and signaling more volatility and more weakness to come. After rallying more than 300 points off last week’s low into Friday’s close, S&P futures opened lower last night, quickly sold off, hit circuit breakers and have been lock limit lower since. The move is in reaction to concerns related to coronavirus unknowns, the Federal Reserve’s second emergency rate cut, and the resumption of bond purchases otherwise known as “quantitative easing.”
Yesterday afternoon, Fed Chairman Jerome Powell announced the decision to cut rates effectively to zero to a range of 0 to 0.25% in response to the coronavirus outbreak. In addition to lower rates to help ease lending concerns, the Fed restarted the purchase of hundreds of billions of dollars in U.S. bonds. The move is an effort to balance out what the Fed anticipates will be a “significant effect” on the economy from the coronavirus.
Crude oil futures traded lower on the news to levels we haven’t seen since February 2016, while the U.S. dollar spiked lower in reaction as interest rates tumbled to historically low levels. Looking ahead, It’s a lighter week for economic data. We have the Empire State Manufacturing data today, then the Philadelphia Fed Business Outlook, Industrial Production, and Quadruple Witching later this week. Today on the TD Ameritrade Network, we’ll discuss all the breaking news and markets reaction to it… stay tuned!
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