By Yasin Ebrahim
The Dow remained under pressure on Tuesday, paced by financials amid a plunge in U.S. Treasury yields to record lows on expectations for more Federal Reserve rate cuts and worries over the ongoing coronavirus spread in the U.S.
The S&P 500 slipped 2.74%, Nasdaq Composite lost 2.92% and the Dow Jones Industrial Average fell 3.09%.
A Westchester County man has tested positive for the coronavirus, New York Governor Andrew Cuomo said on Tuesday, bringing the total of confirmed cases in the state to two and to more than 100 in the country overall.
Against the backdrop of rising infections in the U.S., the Federal Reserve delivered a surprise half-a-point rate cut on Tuesday, taking its benchmark rate to 1% to 1.25%.
With the virus impact mainly on the supply side, many have questioned how much the Federal Reserve's move will support the economy. Still, the move has raised expectations for more cuts in the coming weeks, sending U.S. Treasury yields to record lows.
The United States 10-Year yield fell below 1% for the first time ever, forcing banking socks even deeper into the red.
JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) fell sharply, with the latter down more than 5%.
Lower interest rates are typically a headwind for banks, weighing on net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to their lenders.
