The Federal Reserve took the highly unusual step of injecting more money into the bond market Thursday to ensure the financial system remains stable to help stabilize financial markets that have been wrecked by coronavirus worries.
The stock market crashed to its worst day since 1987, shrugging off dramatic intervention by two central banks and a prime-time address by President Trump as Americans realized theThe Dow Jones industrial average posted its largest one-day point loss in history, dropping almost 2,353 points to close at 21,200.62. In percentage terms, the 10 percent loss marked the Dow’s worst day since the infamous October day known as “Black Monday.
Across the United States, meanwhile, the virus forced schools, sports leagues and entertainment venues — including American icons — to alter their plans. “Let’s put it this way: I’m not concerned,” the president said when asked about having been exposed to the Brazilian official, who was photographed standing alongside him and Vice President Pence.If Thursday’s cascade of cancellations was notable, it was the financial markets that offered an unmistakable verdict on the response by major U.S. and global institutions to the virus.
But others said the market dysfunction showcased a fragility in the system resulting from some of the regulatory changes that were introduced in the wake of the 2008 financial crisis. And to cope, the Fed needs to reinstate its crisis-fighting playbook from 2008.“We just need a really bold response,” said Hal Scott, a Harvard Law School professor who heads the nonpartisan Committee on Capital Markets Regulation. “The spread of the virus is shutting down the economies of these countries.
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