The stock market has no idea how to react to the Fed's emergency rate cut - CNN

The Dow (INDU) has swung 990 points from its high to low-point in a roller coaster morning of trading. The index was down 475 points, or 1.7% following Fed Chairman Jerome Powell's 11 am ET press conference.

Powell stressed that the US economy was strong but that the strain on industries like tourism and travel, as well as supply chains, was becoming apparent in sentiment surveys.

The broader S&P 500 (SPX) was down 1.6% following the press conference. The index logged its best day in more than two years Monday.

The Nasdaq Composite (COMP) dropped 1.5%.

"The impact on the S&P 500 is limited, showing how far aggressive pricing of rate cuts had gone," ahead of the cut, said Sebastien Galy, senior market strategist at Nordea.

Stocks initially jumped higher after the US central bank announced the emergency rate cut, but moved lower as investors weighed the jolt the US economy could get from the Fed's stimulus against the message the stunning rate cut sends: The US economy could be in trouble because of coronavirus.

The surprise move by the Fed followed a wild rally at the start of the week in which the Dow recorded its highest point-gain in history.

The unscheduled rate cut -- the first since the financial crisis -- came as investors worried about the spread of the novel coronavirus and the growing risk to the global economy. Market expectations for an interest rate cut at the Fed's March 18 meeting had been at 100% at the market open Monday, even though Fed officials spoke out last week against cutting interest rates right away.

Finance officials from the world's seven largest advanced economies, known as the G7, failed to calm investors' nerves about the outbreak earlier Tuesday, as the group said it would not coordinate interest rate cuts and made no commitment to fiscal stimulus to stave off the economic fallout.

Wall Street rallied Monday on hopes that central banks would inject stimulus. The rebound rally that ensued brought the Dow its biggest point-gain in history as stocks bounced back from their worst week since the financial crisis.

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