Through it all, markets are still faced with the same quandary that has sent stock prices tumbling 11% since they set a record just two weeks ago: No one knows how far the virus will ultimately spread before authorities can get it under control, and by how much companies’ profits will be shorn because of it.
The Fed has a long history of coming to the market’s rescue with lower rates and other stimulus, which has helped this bull market in U.S. stocks become the longest on record. Some analysts said the Fed’s latest cut could provide some more confidence. The high stakes pushed the Fed to cut rates outside of a regularly scheduled meeting for the first time since the 2008 financial crisis, when investors were considering a complete meltdown of the world’s financial system as possible if not likely. That in itself may have spooked the market, as some investors wondered if the Fed saw things as worse than they were led to believe.
Markets are likely to remain shaky until investors get a sense of what the worst-case scenario really is in this virus outbreak. Worldwide, more than 92,000 people have been sickened, and over 3,100 have died. The number of countries hit by the virus has reached at least 70, with Ukraine and Morocco reporting their first cases.