Your Tuesday Market Blip 3/3/20

Your Tuesday Market Blip 3/3/20

The Fed made a surprise half point rate cut which initially lifted stocks but could not stem the worry investors have over potential economic challenges related to the coronavirus. At the close the Dow was off 785 points at 25,917 in a high volume volatile day. IBD remains in cash and BTS sits comfortably in treasuries which are benefiting from a flight to safety.
In a unanimous vote the Federal Reserve Open market committee cut interest rates by a half a point to a range of 1% to 1.25%. Fed Chair Powell noted that while the US economy remains on good footing they took this action due to the uncertainty and evolving risks of the corona beer virus. Market gurus had mixed reactions to the move since a big rate cut like this out of the blue has only happened a half dozen times the most recent being the 2008 financial crisis. Some gurus think the Fed is showing signs of panic while others feel they are being cautious and just trying to keep ahead of the uncertainty.
Virus counts in South Korea continue to rise rapidly and American Airlines has canceled flights to this country as a result. Iran continues to see a rapid rise in counts and WHO has sent a team there to help and monitor the situation. Europe is starting to see an increase as well which might test the open border structure within the EU. New virus counts in China have slowed dramatically although some question validity of these numbers.
While utility stocks have rebounded the financial sector continues to struggle. Visa lowered its forward guidance due to a sharp slowdown in cross border business. Banks have done well over the past year because of strong consumer banking and merchant card services but there is worry the virus could put a crimp on consumer banking. The good thing is that banks are well capitalized and flush with deposits. There has also been big insider purchases lately of energy pipeline stocks plus Warren Buffett grabbed a million shares of Delta Airlines after it sold off.