Another steep selloff halted trading again on Wall Street on Monday, despite the Federal Reserve’s emergency actions to lower interest rates and pump more money into the economy to combat the impact of the coronavirus.
The S&P 500 quickly plummeted more than 8% after the opening bell, triggering an automatic temporary halt in operations for the third time in the past six trading days. The Dow Jones Industrial Average lost 9.7%, or more than 2,200 points, before trading was suspended for 15 minutes.
The selloff eased after trading resumed, with the Dow off about 7%.
The Fed on Sunday slashed interest rates by a full percentage point to zero, and said it would buy $700 billion in Treasury securities in a massive emergency move to protect the U.S. economy from the pandemic. President Trump said Sunday investors should be “very thrilled” by the move.
The major stock indexes have lost about 30% of their value in less than a month, and analysts increasingly are predicting a recession. Goldman Sachs is forecasting the U.S. economy will shrink 5% in the second quarter after zero growth in the first three months.
Former Trump economic adviser Kevin Hassett said Monday the odds of a global recession “are close to 100% right now.” He said his firm, the Lindsey Group, is forecasting a second-quarter retraction of 5% and that the U.S. economy could show a loss of more than 1 million jobs in March.
“In the U.S., we’re going to have a very terrible second quarter,” he said on CNN.
Goldman Sachs is forecasting the U.S. economy will shrink 5% in the second quarter after zero growth in the first three months.
“We expect U.S. economic activity to contract sharply in the remainder of March and throughout April as virus fears lead consumers and businesses to continue to cut back on spending such as travel, entertainment, and restaurant meals,” Goldman chief economist Jan Hatzius said in a note to clients.