Step forward, two steps back: how the markets reacted to the fed's decision

Despite the rapid growth of indexes in the U.S. stock market after the announcement of the Fed decision on sharp reduction of interest rates, traders have clearly lost the optimism.

Dow Jones Index by the close of trading increased by 9.36%, the S&P 500 by 9.29%, NASDAQ — by 9.35%. However, this growth occurred simultaneously with the fall of the futures on those same indexes.

the Decline has reached the limits of -5%. This limit is set by the futures exchange CME to stop panic fall. Futures on the Dow Jones Industrial Average fell more than 1,000 points, breaking the limit. The S&P 500 futures and Nasdaq 100 also nearer to the bottom border.

the Demand for Treasury bonds also increased after the announcement of the fed decision. The base yields of treasuries fell 30 basis points.

“the fed fired its monetary cannon. But no amount of money will help cure the virus. This will only real medication and time”, — commented the Director of CNBC for investment Bleakley Advisory Group Peter Bukvar. He explained that investors are not ready to buy new assets before the certainty of the situation with coronavirus.

While the fed’s actions are far from useless. “This, combined with the important fiscal package should help to mitigate the economic downturn, which will occur under the influence of the virus on economic activity”, — said the chief market strategist at Prudential Financial Quincy Crosby, “It will have positive effects, but the market depends on the virus and whether the policy of containment”.

it is against the market operates statistics: according to the Johns Hopkins University, the number of cases in the US increased to almost 3.5 thousand, and the number of deaths to 65.