The stock market has no idea how to react to the Fed’s emergency rate cut

The Federal Reserve slashed interest rates by half a percentage point in the wake of concerns that the coronavirus outbreak could damage the US economy. CNN’s Christine Romans reports.

Stocks fluctuated wildly on Tuesday after the Federal Reserve slashed interest rates by a half point to help protect the US economy against the fallout from 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. But stocks were up and down by

The Dow was up points as many as 381 points and down as many as 356 points in a roller coaster open. Stocks initially jumped higher after the Fed cut rates, but then they moved lower. The Dow was most recently down 100 points. The broader S&P 500 was down 0.1% after logging its best day in more than two years Monday. The Nasdaq Composite was down 0.1%.

Investors balanced the jolt the US economy could get from the Fed’s stimulus with the message the stunning rate cut sends: The US economy could be in trouble because of coronavirus.

The unscheduled rate cut came as investors worried about the spread of the novel coronavirus and the growing risk to the global economy. Finance officials from the world’s seven largest advanced economies, known as the G7, did very little to calm investors’ nerves about the outbreak and the group said it would not coordinate interest rate cuts and made no commitment to fiscal stimulus to stave off the economic fallout.

Equities were mostly flat at the opening bell in New York but soon slipped into negative territory.

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.

Fed officials spoke out last week against cutting interest rates right away.

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