By Geoffrey Smith
Investing.com -- The Dow Jones Industrial Average fell below 20,000 for the first time since February 2017 on Tuesday, as a brief attempt at bargain-hunting ran into a wave of fresh selling.
By 10:40 AM ET (1440 GMT), the DJIA had recovered a liltle to be at 20,134 points, down 54 points, or 0.3% on the day. The S&P 500 and the Nasdaq Composite were both up 1.6% albeit in choppy trading.
The moves came against a backdrop of reports suggesting further emergency measures from the Federal Reserve are possible in the near term.
Cleveland Fed President Loretta Mester, who voted against the emergency rate cut at the weekend, said she would support the reintroduction of Fed purchases of commercial paper - last seen during the 2009 financial crisis - if market liquidity continued to deteriorate.
The Fed will conduct a $500 billion overnight repo operation later Tuesday.
Analysts at Pantheon Macroeconomics warned that it was impossible to see a bottom to the market until the shape and scale of the U.S. fiscal response to the crisis becomes clearer.
"We don't know yet whether Congress will spend, say, 2% of GDP or 10%. We hope for the latter, but given that the very modest first-stage House bill has not yet passed the Senate, it's hard to be wildly optimistic just yet," chief economist Ian Shepherdson wrote in a note to clients.
Boeing continued its descent after its debt was downgraded late on Monday by Standard & Poor's, citing a materially worse outlook for the company's cash flow. Boeing (NYSE:BA) stock was down 18.2% and has now lost some two-thirds of its value since the Covid-19 outbreak exploded in February. Exxon Mobil (NYSE:XOM) stock rebounded 4.2%, after it announced it was looking at ways to cut capital expenditure and conserve cash in response to S&P downgrading its debt to AA from AA+ on Monday. That was despite further declines in the price of Crude Oil, as Saudi Arabia detailed its plans to ramp up exports, intensifying the new price war.
Amazon.com (NASDAQ:AMZN) stock rose 5.1% after The Wall Street Journal reported that it intends to increase its workforce by some 12% - or 100,000 workers - to cope with a surge in demand for online shopping and delivery as more and more people find themselves in self-isolation at home. Amazon said on Tuesday it intends to stop delivery of everything but medical supplies and household staples to its warehouses as it struggles with the capacity bottleneck.
Tesla (NASDAQ:TSLA) stock fell 4.9%, meanwhile, against a backdrop of reports that it intends to keep its Fremont factory in the San Francisco bay area open despite the new lockdown measures announced by local authorities. The company said on Monday it had delivered its first Model Y crossover SUV, but the sales outlook remains clouded by the global problems sweeping the car industry. Volkswagen (DE:VOWG_p), the world's biggest carmaker, said earlier Tuesday it will suspend production at most of its plants across Europe from the end of the week.