Wall Street turned briefly positive Monday morning after a new round of emergency action from the Federal Reserve, before sinking into the red at the open.
The Dow Jones Industrial Average opened with a loss of around 350 points, with the S&P 500 down by around 2 percent and the tech-heavy Nasdaq lower by 1.25 percent.
Stocks slid despite “extensive new measures to support the economy” announced by the Federal Reserve. The central bank said Monday it would inject billions more into the financial system, boost credit flow for businesses and consumers and provides $300 billion in new financing, the Fed said.
However, traders are laser focused on the stimulus plan that is currently stalled in the Senate.
“We need to get this thing passed today,” Treasury Secretary Steven Mnuchin said Monday morning in an interview with CNBC. “We need Congress to approve additional funds today so that we can move forward and support American workers and the American economy,” he said.
“The Federal Reserve continues to do all it can to keep markets operating. Now, the spotlight is on elected leaders to do their jobs as well,” said Mark Hamrick, senior economic analyst for Bankrate.
American companies could lose as much as $4 trillion — one-fifth of the country’s total annual economic output — due to the pandemic, according to Ray Dalio, founder of hedge fund giant Bridgewater.
With more and more states — and countries — implementing lockdowns and closing businesses, the financial impact of those measures threatens to outweigh even the most extreme government efforts to shore up the economy.
“What needs to happen is very similar to what happened in the war years, but without the fighting,” Dalio told Reuters, noting that the government needs a rescue plan.
Until that happens, traders will continue to rush for the exit.
Monday marks the first day since 9/11 that the New York Stock Exchange is operating with an empty floor, after trading was switched to an all-electronic format until further notice due to safety concerns about the coronavirus pandemic.