US stock futures hit ‘limit down’ after Fed cuts interest rate to zero

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Dow (INDU) futures plummeted and were last down 1,041 points, or about 4.5%. S&P 500 (SPX) futures were down about 4.8% , while Nasdaq (COMP) futures were down 4.5%.

Last week all three indexes fell into a bear market, declining more than 20% from their recent peak.

The sharp decline in futures came after the Federal Reserve announced an emergency rate cut, and said it would purchase another $700 billion worth of Treasury bonds and mortgage-backed securities, in a bid to support the economy during the coronavirus pandemic

The swifter-than-expected rate cut is designed to prevent the kind of credit crunch and financial market disruptions that occurred the last time the Fed had to cut rates all the way to the bottom.

“I don’t think [the Fed] would have done this unless they felt the financial markets were at significant risk of freezing up tomorrow. They’re very concerned the financial markets won’t work. So I don’t know how the markets take solace in this.” Mark Zandi, chief economist of Moody’s Analytics, told CNN Business.

The Fed last cut rates to zero during the global financial crisis just over a decade ago.

There are now more than 3,000 cases of the novel coronavirus in the United States, according to government agencies and the CDC.

– David Goldman and Chris Isidore contributed to this report

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