Investors appear to have viewed the Federal Reserve's big interest rate cut as desperate, not bold. After the Fed announced Sunday that the rate was being cut to almost zero, futures on the S&P 500 and Dow Jones plunged 5%, triggering the "limit down" to halt further trading below that level, MarketWatch reports. The Dow is set to open down 1,000 points from Friday's close. Asian markets also fell Monday, with Japan's Nikkei 225 index down 3% despite emergency action from the Bank of Japan. In Australia, Sydney's benchmark was down almost 10%. "Markets might have perceived the Fed's response as panic, feeding into its own fears," says Vishnu Varathan of Mizuho Bank, per the AP.
The Fed, which cut interest rates by a full percentage point, also said Sunday that it will purchase $500 billion of Treasury securities and $200 billion of mortgage-backed securities. "The Fed blasted its monetary bazooka for sure," Peter Boockvar, chief investment officer at Bleakley Advisory Group, tells CNBC. "This better work because I don't know what they have left and no amount of money raining from the sky will cure this virus. Only time and medicine will." Stephen Innes, global chief markets strategist at AxiCorp, tells CNN that central banks including the Fed are running out of ways to respond to the coronavirus crisis, and "markets now appear kind of defenseless to another selling onslaught." (Read more coronavirus stories.)