Dow Plunges Nearly 800 Points, Despite Fed Rescue Attempt The Federal Reserve cut interest rates by the largest amount since the 2008 financial crisis, but the emergency move failed to mollify investors worried about the coronavirus epidemic.

Dow Plunges Nearly 800 Points, Despite Fed Rescue Attempt

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


The Federal Reserve is taking action against the coronavirus. The central bank announced a surprise move this morning to cut interest rates by half a percentage point in order to cushion the epidemic's economic blow. This comes after a conference call with finance ministers and central bankers from other G7 countries around the world. We've got NPR's Scott Horsley with us in studio to talk about the repercussions of it. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Rachel.

MARTIN: We called this a surprise move more because of the timing than anything else, right?

HORSLEY: That's right. Investors had been more or less banking on the Fed to cut interest rates, and they were even expecting the Fed to maybe act before its next scheduled meeting in a couple of weeks. But the expectation had been for action maybe tomorrow, so this is something of a jump-start. The Fed does not have a whole lot of room to cut interest rates. Rates were already pretty low. So the central bankers are trying to get as much bang for the buck as they can. And so this earlier-than-expected announcement seems designed to serve as kind of a economic defibrillator for all those fluttering hearts on Wall Street.

MARTIN: (Laughter) Fluttering? More than fluttering sometimes.

HORSLEY: (Laughter).

MARTIN: I mean, the market's been so volatile over the last few weeks. How are investors reacting to the Fed's move today?

HORSLEY: Investors don't seem to quite know what to make of this. The market got an immediate bounce when the announcement was made about 45 minutes ago. The Dow Jones industrial average jumped more than 300 points. Then it sagged back into negative territory, as investors thought more about this. As of this moment, the market is up about a third to a half a percent. But, you know, after a very volatile week or 10 days, it looks like the rocky ride is set to continue a while longer.

MARTIN: I mean, this is part of a coordinated effort by central bankers around the world. Is this all about mitigating the effects of the coronavirus, globally?

HORSLEY: That's right. Jerome Powell was on the telephone this morning with his central bank counterparts from the other G7 countries. Treasury Secretary Steven Mnuchin was also on that call, as were the other finance ministers from the big industrial countries. Obviously, coronavirus is a worldwide problem, so economic leaders are trying to craft a worldwide economic response.

After that conference call, the leaders issued a joint statement in which they promised to use all appropriate policy tools to address the coronavirus spread. Obviously, it's up to doctors and public health officials to deal with the medical challenge, but when it comes to the economics, these leaders say they are prepared to use both interest rate cuts, like we've seen this morning, as well as, you know, fiscal measures - that is, government stimulus, like we saw during the Great Recession.

MARTIN: So you - can you walk us through - I mean, what will this move accomplish and what won't it accomplish in terms of helping the economy through the coronavirus?

HORSLEY: Here's what it won't do - it will not expedite the development of a vaccine, which public health officials tell us is about a year away. It will not revive all the travel that's been cancelled as a result of the epidemic...

MARTIN: Right.

HORSLEY: ...Or the business meetings that have been called off and the deal that won't get done because of that. It also won't address the supply chain challenges. We got a report yesterday on the U.S. manufacturing sector, which is running barely above stall speed, and the report included a lot of complaints from factory owners who say they're having trouble getting both parts as well as information from their suppliers in Asia, where the epidemic and the quarantines have shuttered a lot of factories. Nothing the Fed did today is going to change that.

What it may do, though, is prop up the stock market and avoid the kind of reverse wealth effect we have been in danger of seeing, you know, if consumers just stopped spending altogether. Consumer spending is a huge driver of the economy, and while the Fed can't necessarily reassure consumers who are nervous about their own health, it can reassure those who are nervous about the health of their retirement accounts. So that's what we're seeing with this action today.

MARTIN: All right. NPR economics correspondent Scott Horsley. Thanks, Scott. We appreciate it.

HORSLEY: You're welcome.


Copyright © 2020 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.