The Dow dropped 785.91 points, or 2.94%, to 25,917.41. The S&P 500 plummeted 2.81% to 3,003.37. The Nasdaq Composite cratered by 2.99% to 8,684.09. A Federal Reserve rate cut of 50 basis points failed to assuage concerns of a global economic slowdown.
The Federal Reserve cut rates in between its scheduled meetings for the first time since the financial crisis. Traders had already priced in a cut of that magnitude, but most didn't expect the Fed to lower the rates on Tuesday specifically. The Fed noted the coronavirus poses a material risk to the global economy. However, Chairman Jerome Powell said the central bank was not prepared to use any other tools aside from rate cuts to stem the economic slowdown. Stocks briefly rallied on news of the rate cut, but later turned sharply lower as investors dumped equities in favor of bonds. The benchmark 10-year Treasury yield dropped below 1% for the first time ever.
The so-called FAANG stocks — Facebook, Apple, Amazon, Netflix and Google-parent Alphabet — all fell between 2.30%. and 5.56%. Bank stocks also dropped as the 10-year rate fell to a record low. Bank of America closed 5.52% lower while JPMorgan Chase and Citigroup slid 3.75% and 3.76%, respectively.
Investors will look for any news on measures taken by fiscal and monetary authorities throughout the world to curb slower economic growth. On the data front, ADP and Moody's Analytics are scheduled to release their monthly private payrolls data. The ISM nonmanufacturing PMI is also set for release.
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