U.S. stocks tumbled and Treasuries surged as investors worried the Federal Reserve’s emergency cut won’t be enough to combat the economic impact of the coronavirus.

The S&P 500 headed for its eighth drop in nine days, falling more than 3 per cent, following the Federal Reserve’s 50 basis-point cut of its benchmark rate. Fed chair Jerome Powell said during a press conference that the U.S. economy remains strong but the virus outbreak will weigh on activity “for some time.”

The two-year Treasury yield sunk to 0.65 per cent, while the 10-year plunged below 1 per cent for the first time ever. Banks led losses on equity benchmarks.

“Does a 50 basis point cut change things? That’s a tough one to answer,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. “Fed cuts tend to be less effective in situations like this when there is a supply and demand shock.”

Investors had piled out of risk assets last week as the spreading virus threatened to derail global growth, only to pour back in Monday in anticipation of concerted action from Group of Seven officials. Oil pared its rebound Tuesday, approaching US$46 a barrel, while gold rose. The yen was higher versus the dollar.

“Moving between meetings with a bigger than normal interest rate cut looks like Fed officials are panicking as much as stock market investors did last week,” said Chris Rupkey, chief financial economist for MUFG Union Bank. “They did not need to be so aggressive and the Fed under Powell keeps responding wrongly in our view more to the financial markets than they are to the broader economy. We aren’t in a recession yet and today’s move won’t keep one from coming.”

The OECD warned that growth will sink to levels not seen in more than a decade and ever more businesses are warning about the impact of the illness.

The governor of the Bank of England, Mark Carney, said it would take all necessary steps to help the economy. Australia lowered its benchmark by a quarter percentage point. Its currency rose, however, underscoring how traders’ expectations have rapidly shifted in recent days.

These are the main moves in markets:

Stocks

• The S&P 500 Index fell 3.3 per cent as of 2:12 p.m. New York time.
• The Down Jones Industrial Average dropped 3.5 per cent.
• The Stoxx Europe 600 Index gained 1.4 per cent.
• The MSCI Asia Pacific Index rose 0.5 per cent.

Currencies

• The Bloomberg Dollar Spot Index fell 0.4 per cent.
• The euro rose 0.2 per cent to US$1.1161.
• The British pound gained 0.4 per cent to US$1.2808.
• The Japanese yen strengthened 0.9 per cent to 107.33 per dollar.

Bonds

• The yield on 10-year Treasuries decreased 21 basis points to 0.95 per cent.
• The two-year rate lost 25 basis points to 0.66 per cent.
• Germany’s 10-year yield dropped two basis points to -0.64 per cent.

Commodities

• Gold futures added 2.9 per cent to US$1,635.10 an ounce.
• West Texas Intermediate crude was little changed at US$46.80 a barrel.