new York The joy of a surprising US interest rate cut to combat the consequences of the coronavirus epidemic quickly evaporated on the New York stock exchanges on Tuesday. The US Federal Reserve cut the key rate unscheduled by half a percentage point.
Investment strategist Michael O’Rourke from brokerage firm JonesTrading described the Fed decision as a panic reaction and a mistake. “It doesn’t get people to go to the movies, conferences, sporting events, or any other big event.”
The Dow Jones lost 2.9 percent to 25,917 points. The technology-heavy Nasdaq dropped three percent to 8684 points, and the broader S&P 500 lost 2.8 percent to 3003 points.
Hopes of immediate economic stimulus from the large industrialized countries had previously dampened the buying mood of US investors. On Monday, the Dow rose 5.1 percent after announcing a conference call between finance ministers and central bank governors from the seven largest industrialized countries (G7). That was the biggest daily gain in eleven years. The talks on Tuesday did not deliver any concrete results. The participants only reaffirmed their willingness to help the economy.
Thermo Fisher was one of the favorites on the US stock market with a price increase of 3.4 percent. The laboratory supplier wants the German rival Qiagen take over for 10.4 billion euros. The two companies were an excellent match, praised the analysts at Evercore. Qiagen papers listed in the United States gained a good 14 percent.
The losers, however, were the shares of Hyatt at a discount of 3.2 percent. The hotel group had previously issued a profit warning because of the coronavirus epidemic. Large technology companies also sagged. Google lost 3.5 percent, Apple 3.2 percent, Microsoft 4.8 percent.
Some investors’ doubts about the benefits of the US rate cut for the economy were also evident on the bond market: The yield on ten-year US bonds fell below the one percent mark for the first time in the history of the United States on Tuesday.
In Frankfurt could the Dax not keep his interim profits of more than three percent. The leading German index closed on Tuesday 1.1 percent higher at 11,986 points.
More: Read what happens after the Fed cut rates.