US stocks close lower after Asia-Pacific markets plunge on growing fears of global recession amid explosive spread of Covid-19
- US markets drop despite Fed announcing new steps to bolster economy, as new cases surge
- Senate fails to pass stimulus package as Democrats continue to negotiate
US stocks followed a drop in Asia-Pacific markets, which plunged on Monday over concerns that a deep global recession is building as the world’s coronavirus death toll rose and the US Congress failed to pass a proposed US$1.8 trillion stimulus package.
The Dow Jones Industrial Average and the Standard &Poor’s 500 index both closed about 3 per cent lower. The Nasdaq composite index, heavy in tech stocks, pared some losses, falling only about 0.3 per cent.
The Federal Reserve announced before the opening Wall Street bell that it would widen an emergency lending programme announced a week earlier to keep credit flowing to individuals and businesses.
The Fed’s lending programme will be expanded to include corporate and municipal debt; purchases of US Treasuries and other government-backed debt will be made unlimited. The rate-setting body earlier said that it would buy at least US$500 billion of Treasury securities and at least US$200 billion of mortgage-backed securities.
Senate Democrats blocked legislation for a second consecutive day on an economic stimulus and relief package expected to involve as much as US$2 trillion for companies and individuals.
Democrats insisted on further negotiations, likely pushing a vote towards the end of this week. At issue is whether the bulk of the money should go to workers, as Democrats favour, or whether more should go to companies and banks as supported by Republicans.
