The S&P fell sharply on Tuesday as the Federal Reserve rate cut was largely shrugged off amid an ongoing spread of the coronavirus in the U.S.
The S&P 500 slumped 2.8%, the Nasdaq Composite lost 3% and the Dow Jones Industrial Average fell 2.95%, or 789 points.
Washington state authorities now report nine deaths from Covid-19, while North Carolina reported its first case and New York reported its second.
The update on the spread of the virus in the U.S. arrived hours after the Federal Reserve cut its benchmark rate by half a point to a 1%-to-1.25% range.
But after brief rally, stocks reversed and followed Treasury yields lower.
“A move of this size, at or before the committee’s next meeting on March 18, was already fully priced in financial markets after a statement from Chair Powell late last week suggested the Fed was ready and willing to take action,” RBC said.
In afternoon trading, bonds saw a huge rallying, pushiing yields to unprecedented lows. The 10-Year Treasury yield fell below 1% for the first time ever to a low of 0.906% before paring some losses.
JPMorgan , Goldman Sachs, and Bank of America fell sharply, with the latter down more than 5%.
Lower interest rates are typically a headwind for banks, weighing on net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to their lenders.
Technology stocks also led the move lower in the broader market, paced by a slump in chip stocks, which entered correction territory amid fears a slowdown in global growth could weigh on demand.
Advanced Micro Devices, Nvidia , Intel and Micron ended the day in the red.
Elsewhere in tech, Alphabet canceled its annua Google developerl conference and also confirmed it has halted international employee travel amid concerns over the coronavirus impact.