Investing.com - U.S. stocks staged a big comeback in afternoon trading Thursday after the Federal Reserve ramped up asset purchases, pumping to support funding markets at a time when the spread of the coronavirus has triggered panic selling.
The S&P 500 was down 5.9%, but had been down more than 8% before the announcement.
The Dow was off 6% and the Nasdaq Composite fell 5.6%.
In a bid to address "temporary disruptions" in Treasury financing markets, The Federal Reserve said it would offer $500 billion in a three-month repo operation at 1:30 PM ET today. Tomorrow it will “offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same day settlement.”
The Fed has been supporting the short-term funding market for months now, purchasing treasury bills, in an effort to avoid a repeat of the liquidy crunch in September last year, when short-term funding rates surged, triggering a sharp selloff on Wall Street.
The U.S. central bank said it would now extend its purchases “across a range of maturities” to include bills, notes, Treasury Inflation-Protected Securities as well as other instruments. The purchases start Thursday and would continue through April 13.