Dow Jones skids nearly 3,000 points — biggest drop since 1987

The Dow plunged nearly 3,000 points on Monday — or nearly 13 percent,  its biggest drop since the “Black Monday” crash of 1987 — after the Federal Reserve’s surprise move to slash interest rates to near zero stoked fears about the damage the coronavirus is doing to the economy. Stocks accelerated their downward move in …

The Dow plunged nearly 3,000 points on Monday — or nearly 13 percent,  its biggest drop since the “Black Monday” crash of 1987 — after the Federal Reserve’s surprise move to slash interest rates to near zero stoked fears about the damage the coronavirus is doing to the economy.

Stocks accelerated their downward move in the final minutes of trading as President Trump warned that the deadly virus may not peak in the US until July or August. The White House stepped up recommendations including canceling all discretionary travel and avoiding public spaces and gatherings of more than 10 people.

The Dow Jones industrial average fell 2,997.10 points, or 12.9 percent, to 20,188.52. That’s within spitting distance of 19,827.25, where the Dow closed the day of President Trump’s inauguration on Jan. 20, 2017.

The S&P 500, which had triggered its third “circuit breaker” at the start of the day by plunging more than 8 percent within seconds of the opening bell, lost 12 percent to close at 2,386.13. The Nasdaq fell 12.3 percent to 6,904.59.

The Fed’s second emergency rate cut in less than two weeks came late Sunday, just two days ahead of its scheduled policy meeting on Tuesday and Wednesday. The cut took many investors by surprise, fueling a sense of alarm that the central bank is quickly using up its ammunition to fight the deadly epidemic.

In addition to slashing near-term interest rates to between zero and 0.25 percent, the Fed said it will buy at least $500 billion of Treasury securities and $200 billion of mortgage-backed securities. Trading in the market began to get snarled last week, with traders saying they saw disconcertingly large gaps in prices offered by buyers and sellers.

“Despite whipping out the big guns,” the Fed’s action is “falling short of being the decisive backstop for markets,” said Vishnu Varathan of Mizuho Bank in a report. “Markets might have perceived the Fed’s response as panic, feeding into its own fears.”

Monday’s tumble immediately followed a record-breaking rally on Friday, when the Dow surged 1,985 points after President Trump declared a national emergency and unveiled $50 billion war chest to fight the pandemic.

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